Estate Planning Attorney

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A trust is a right in an asset or a property, which is held in a fiduciary relationship by one entity for the benefit of another. The one who holds the title to the trust property is referred to as a trustee while the person who is entitled to receive benefits is deemed as beneficiary. There are numerous categories of trust, each of which are created for different purposes. Here are some different types of trusts in the United States:

Revocable Trusts – Revocable trusts, also known as living trusts, are created during the trust maker’s life and can be changed, modified, altered, or revoked. The trust maker transfers the title of a property to a trust. The trust maker also serves as the initial trustee and has the control to remove the property during their lifetime. It is mainly used to avoid probate as the transfer of ownership during the lifetime will not be subjected to probate.

Irrevocable Trust – Conversely, an irrevocable trust cannot be changed, modified, altered, or revoked. Moreover, the trust maker cannot take the property out of the trust once it has been transferred. Though the trust maker can purchase survivorship life insurance for estate tax planning purposes, it can have severe negative consequences.

Asset Protection Trust – An asset protection trust, as the name suggests, is created to protect an individual’s asset from potential claims of future creditors. It is typically set up in countries outside the U.S., although there is no requirement for the assets to be transferred to the foreign jurisdiction. An asset protection trust is structured by a trusted maker with the purpose of receiving the assets back upon the termination of the trust, given that they are not facing the risk of creditor attack.

Charitable Trust – A charitable trust is formed for the benefit of a particular charity or the general public. They are typically established to reduce the amount of estate and gift tax. Moreover, there is a charitable remainder trust (CRT) which is funded during the grantor’s lifetime and it can serve as a financial planning tool. Aside from financial advantages, charitable trusts provide an intangible benefit to the trust maker by rewarding their philanthropy and honoring them.

Constructive Trust – A constructive trust is established by a court after determining certain facts and circumstances. It is an implied trust created when a court decides that the intention of the property owner was that the property would be named to a particular individual or used for a particular cause.

Special Needs Trust – A special needs trust is set up for an individual who receives benefits from the government. This is usually set up in an attempt to keep the beneficiary qualified for such government benefits. A special needs trust is completely permissible by law and allowed as per Social Security rules, as long as the disabled beneficial is not provided the control of amount or frequency of trust distributions.

Do You Need a Lawyer?

Forming a trust is an excellent way to protect your assets and ensure that the financial future of your loved ones is secured. It can be extremely beneficial for you to consult an experienced estate planning attorney and seek their advice to understand which trust will serve you the best.

Using their knowledge and understanding about financial aspects and legal technicalities, a estate planning attorney will help you to make a decision which will serve you and your family best for the many years to come.