What You Need to Know About Trusts
A trust is a legal document that spells out exactly how you want your assets to be handled when you pass away. The most common reasons to create trusts include reducing tax burden, avoiding the potentially lengthy and expensive process of probate, and assuring that assets are managed for a loved one who may not be able to do this for themselves. Additional reasons to create a trust is to leave assets to charities and to maintain privacy. Probate is public record while trusts are not. The common belief that trusts are suitable only for the very wealthy is simply untrue; trusts can benefit a great many people.There a many types of trusts each of which is designed to accomplish a specific goal.
Living Trust
A living trust (often also called a revocable trust) is a trust created while you are alive that you control. Assets are placed in the trust for your control and use for the remainder of your life. They are then transferred to the person of your choice upon your death. Assets in a living trust typically do not have to go through probate. The tax burden may also be different. You can specify a trustee to manage your trust if your children are minors when you pass away or if they have difficulty managing money. You can also have the trust paid out in stages. This is especially good if you have young adult children who may not be quite ready to take on full responsibility for your full estate.
Special Needs Trust
A special needs trust is critical when providing for a disabled loved one. Often, government programs are income or asset-based, and a beneficiary could be excluded from necessary programs when receiving a lump sum of money, like an inheritance. This type of trust excludes those funds from being included in the beneficiary’s financial assessment and allows them to retain eligibility for supplemental programs.
Testamentary Trust
A testamentary trust is a trust set up to be employed after your death. It is typically part of a will. Though it may not help to avoid probate, this can still be useful for planning purposes, such as when you want to make sure a child or grandchild doesn't get assets until a certain age or if you want them distributed over a number years.
The experienced team at Stratton & Reynolds, LLC will sit down with you to discuss your needs and goals to help draft a trust that provides the greatest protection and provides the most secure future possible for your loved ones. Call our office today at (803) 358-7214 or fill out the brief contact form to learn more about how we can help you avoid probate and design a trust that is the perfect fit for your family.
