A trust is a legal arrangement that facilitates the transfer of assets from generation to generation, while avoiding many of the liabilities that accompany wills. If you have money or property that you want to leave to your family upon your death, you may benefit from establishing a trust in your name, with your loved ones as the beneficiaries.
There are two basic types of trusts: inter vivos and testamentary trusts. A trust that becomes effective during your life is known as an inter vivos or living trust. This type of trust can be either revocable or irrevocable. A testamentary trust is created within your Last Will and Testament and goes into effect upon your death.
There are several major advantages to trusts, including the fact that it will not be subjected to a succession or probate before the distribution of assets, the details of your gifts will not go on the public record, and you can dictate a schedule of payments to your beneficiaries. There are also specialized trusts that can be created for your unique circumstances.
Irrevocable trusts are a common tool in estate planning, as they provide an effective means of passing assets to heirs. By establishing an irrevocable trust, you can preserve a larger percentage of your total estate for your family to enjoy when you have passed.
The funds in the trust will be available to the beneficiaries according to whatever schedule you set, meaning that your heirs will not receive a lump-sum gift all at once. The distribution of assets will not be held up by probate, and those assets will be beyond the claims of creditors with claims against your estate.
Once an irrevocable trust has been created, it cannot be changed or revoked. Neither the beneficiary, the trustee nor the person who created the trust will be able to alter anything in the trust document. It is vitally important that legal representation is sought before creating an irrevocable trust. A revocable trust, or a living trust, allows one to place funds or property in a trust account, but allows them to reserve the right to change the terms or completely annul it. As both types of trusts have different advantages and disadvantages, it is recommended that you discuss your particular circumstances with a qualified attorney to learn which option is better for your unique situation.
Special needs is the broad category of requirements and care for individuals suffering from a wide range of physical disabilities, medical conditions, intellectual difficulties, or emotional problems. These conditions may have originated at birth or as the result of an injury or illness. Often, individuals with special needs are well acquainted with the Medicaid system that provides public assistance to physically or mentally disabled individuals. A problem that commonly arises during estate planning is that when someone with special needs inherits a large amount of money, they are often made ineligible for further benefits. There are many advantages to a special needs trust including that your loved one is not disqualified from any further government aid because of the money which you have left in trust for them.