Chester Trust Lawyer
Estate planning is all about empowering individuals to control how their assets are used and distributed when they are gone. Though defining one’s wishes is relatively simple, legally establishing those wishes to be executed accordingly can be quite complex. Establishing a trust is one of the most customizable and secure parts of any estate plan in Chester, SC. Partnering with a qualified estate planning attorney is the most effective way to set one up, and the experienced lawyers at Mack & Mack Attorneys can help you create yours.
What Is a Trust?
A trust is a legally supported estate plan arrangement in which a third party is identified as a manager of both property and assets on behalf of the person who established the trust or on behalf of the beneficiaries of the trust. The individual who created the trust is known legally as the grantor, and the trustee is the legal term for the person managing the trust.
The trustee is then responsible for managing the assets within the trust, ensuring that all the terms established in the trust are followed. The grantor can designate any person of their choosing to be the trustee but should pick someone they know to be trustworthy. Depending on how the trust is set up, the trustee will assume care over the trust:
- Immediately upon signing,
- When a certain condition has been met, such as the grantor’s incapacitation, or
- Upon the death of the grantor.
What Types of Trusts Are Available?
When it comes to estate planning, trusts offer some of the most variability and options available. While the plethora of options allows you to discover a trust setup that works for you, navigating the options can be confusing without help. There are two basic types of trusts:
- Revocable trust. A revocable trust, also known as a living trust, allows the grantor to control which assets are held in the trust for as long as they are living. This is the most common type of trust. The grantor can make any changes to the trust they wish throughout their lifetime, ensuring that their current wishes will always be met.With this setup, much of the probate process can be avoided, and assets can be distributed to beneficiaries at a prescribed rate, whether that is at a later date, incrementally, or after a condition has been met.
- Irrevocable trust. An irrevocable trust offers asset security to the grantor, as all assets placed into an irrevocable trust remain there until the prescribed conditions are met. While this setup offers more security, it is also much less flexible. Once assets go into this trust, they cannot be taken out — not even by the grantor.This type of trust offers several tax benefits and can protect the assets from being garnished or taken in a lawsuit if the grantor were to be sued. It is vital, however, to take care when establishing an irrevocable trust, as none of the conditions can be altered or terminated once the document is signed.
There are a number of reasons for establishing a trust. It is quite common for a trust to be set up with a specific purpose or intended goal for the assets. In these circumstances, the trust can be set up to accomplish the stated purpose for the assets by designating and legally limiting their use to a certain use. Some common examples of designated trusts include:
- Special needs trust. This type of trust is established for a person living with a mental or physical disability. The trust is controlled by federal and state legislation, must be used for the person with special needs, and cannot be used in place of any government agency funds. For example, the assets cannot be used to cover Medicaid or Medicare expenses but can be used to supplement any costs not covered by either.
- Educational trust. This type of trust is established with the purpose of providing for an individual’s education. Designated beneficiaries can withdraw funds from this trust provided it is for the educational use outlined in the terms of the trust.
- Life insurance trust. This type of trust can hold any life insurance policy you have and will distribute the proceeds compliantly at the proper time. Doing so through a trust provides both privacy and tax benefits.
- Charitable trust. This type of trust can ensure that designated funds go to the charity organization or charitable purposes of your choosing. Establishing a charitable trust saves money on taxes, which greatly increases both the contribution and the impact of your donation.
Benefits of Establishing a Trust
Trusts offer unique benefits to your overall estate plan. Some of the most common benefits include:
- Avoiding probate. In contrast to wills, which have to go through probate for verification and distribution, trusts are typically exempt. Additionally, by avoiding probate, assets in a trust can be distributed quicker and more simply.
- Keeping affairs private. Because a trust does not go through probate, it remains a private enterprise. Only you, your attorney, and the trustee need to know about it. Privacy keeps you and your family’s financial matters out of public view.
- Providing tax benefits. Depending on how the trust is set up, there may be significant tax benefits available to the trust. For instance, an irrevocable trust could be exempt from estate tax after your death, leaving a larger portion of inheritance available to your family.
- Delineating asset use. One of the unique advantages of a trust lies in the ability to define parameters for the distribution and use of the assets. For example, rather than being distributed all at once in full, you could have assets paid out on a monthly or yearly basis, limiting how much of the inheritance a person can use at a time. Additionally, you can limit the assets to a particular use, such as buying a house or attending college. Lastly, you could set the asset distribution to occur upon a particular event, such as when a beneficiary gets married or graduates college.
Contact a Qualified Estate Planning Family Attorney
If you are ready to get started in setting up a trust as part of your estate plan, speak with a member of our team at Mack & Mack Attorneys. We offer comprehensive legal counsel in all Chester estate planning matters and can ensure that your trust is legally sound and accomplishes the purpose for which you set it up. Contact our office today for a consultation.