Lancaster Trust Lawyer
The goal of trusts in estate planning is to empower individuals with a degree of flexibility and control over how their assets will be distributed, either after their passing or when they signify their wishes for trust estate administration. Because estate planning is so personal to an individual, and complex in execution, there are a ton of different trust options to choose from. Taking the time to understand all of these more, and how an estate planning lawyer can keep you confident in the validity of your trust, will make you a more informed and confident client.
The Basics of a Trust
A trust is a formal estate planning arrangement that is supported by the law. It is when a third party that is identified as a trustee is enlisted to hold or manage assets on behalf of someone else for their beneficiaries. A grantor is the name of an individual who creates the trust and wants a say in how the property or assets are transferred. The trustee they select is responsible for managing all assets within the trust and making sure that the agreed-upon terms are followed during distribution. Trusts add a comfortable level of asset protection and privacy that can also help everyone avoid probate.
Understanding Probate and Its Process
Probate is the legal process that is enacted after someone passes away. Their estate is administered by the court and distributed to any applicable beneficiaries. The process includes:
- Validating the individual’s will if it exists
- Appraising the assets to see what they are worth
- Paying all outstanding debts
- Distributing what remains to identified beneficiaries
This process can be extremely time-consuming and exhausting for all of those involved. If the individual who passed was able to set up a trust beforehand, this entire process can be avoided, which offers a ton of relief to their family and friends.
What Are Living Trusts?
As the name suggests, a living trust is created when the individual is alive. By nature, these trusts are revocable, which means that the individual can change them as much as they want while they are alive and able to do so. The creator can transfer assets such as their bank account, any real estate they own, and any investments through the trust. This is why the living trust has a reputation of being one of the most popular and versatile estate planning tools.
An Overview of the Different Types of Trusts Available
With so many different types of trusts, and their associated terminology, it can become very confusing for the average individual who is trying to plan their estate to take care of their loved ones. Some of the most popular trust options available include:
- Revocable Living Trust: This allows you to keep control over your assets throughout your entire lifetime. You can make as many changes as you need, so you can feel confident that your exact wishes will be carried out when you pass away.
- Irrevocable Trust: There is no room for the trust to be amended by the grantor once this legal document is established. Some people like this option for greater protection of their assets and the tax benefits that come with it.
- Testamentary Trust: This is created by a will and is established after the grantor has died. It offers some benefits when going through the probate process, such as reducing the amount of time needed to distribute assets to beneficiaries, but it does not fully avoid probate.
- Special Needs Trust: If you have anyone in your family with a disability, this trust is designed to transfer any assets you identify to that individual without impacting their ability to collect other government benefits for their condition.
- Charitable Trust: If there is a particular cause or charity that you would like to contribute to with your estate, this trust can ensure that the charity receives whatever it is you signify while offering significant tax benefits. Saving money on taxes can dramatically increase the impact you make.
- Spendthrift Trust: Sometimes, creditors mismanage their own operations and try to take advantage of a trust if they become aware of the beneficiary who is going to receive assets from it. This trust provides extra protection, so even if creditors are aware of what is going on, they cannot exceed their power to intervene.
- Life Insurance Trust: There are tax benefits to acquiring a life insurance trust. These hold any life insurance policy you have and compliantly distribute the proceeds to all of your identified beneficiaries. This can provide liquidity for your estate.
How to Choose the Right Trust for Your Needs
With so many different trust options to choose from, it can become overwhelming when deciding which trust is right for you. Here are some key considerations to make that can help:
- Consider Your Estate Planning Goals: Take some time to decide what is most important to you. For some, it’s making sure that their family can avoid the probate process after their passing. They don’t want them to have that extra burden as they are grieving. For others, it might mean taking extra steps to avoid any intervention from creditors. When you define what you care about most, it provides some direction as to what trust would help the most.
- Tax Implications: Tax law is extensive and diverse. All trusts have different implications as to how much or how little of your estate will go to the government. For instance, anyone who wants to pay as little tax as possible, and is not concerned about needing to change their trust after creating it, would likely find that an irrevocable trust suits them.
- Asset Protection: When someone passes away, there could be a combination of creditors and other third parties who want to take a piece of the final estate. This is why the different trust options have varying levels of protection against other parties stepping in and trying to take some of what’s yours.
- The Needs of Your Beneficiaries: Who you want to leave some of your estate to will influence what trust will help the most. For example, you may want to set up a trust to provide for the education and living expenses of any minor children in your family. Another common scenario is choosing a special needs trust for a loved one with a disability. When you are feeling overwhelmed by the number of trust options, writing down who you care about most, and connecting their needs to the different trusts, is an excellent exercise.
The Role of Trust and Estate Planning and Probate Lawyers
The average Lancaster resident is not formally educated on trusts and estate planning, which is why attorneys who focus on only these issues exist. They can provide a ton of value in helping you select the most favorable trust for your family, including:
- Estate Strategy Development: From the first consultation, an estate planning attorney can begin to understand your needs and develop a personalized strategy to help meet your goals. Sometimes, the difference in value one trust can provide versus another is so minor that only a professional attorney can pinpoint the intricacies.
- Trust Creation and Customization: You will need a trust lawyer to physically draft the document to make sure it is compliant with all legal requirements. In addition to just making sure the trust will be legally enforceable when the time comes, an attorney can also customize the document to fit your unique objectives. For example, they can restrict access to specific funds until one of your beneficiaries reaches a certain age.
- Estate and Gift Tax Planning: If you have any intention to give away any assets in the form of gifts, an attorney needs to be aware of this so they can construct your trust in the most tax-advantageous manner. This usually involves structuring a trust to maximize its use of the federal gift tax exemption.
- Drafting Your Will: In addition to trust support, you can also tap your attorney for help in creating a will. There are many options available that can complement a trust. They can cover some items that cannot be included in a trust. Your attorney can offer even more guidance on how assets can be distributed after death. The most important thing is that you want your will to be free of any legal loopholes that would allow someone to start contesting it. When this happens, it’s particularly upsetting because the individual who owns the will is no longer around to defend their intentions. However, an attorney can advocate for your rights even after your death. They can also keep a record of your conversations and desires as evidence when they are in court or probate.
Contact Mack & Mack Attorneys Today
If you are currently debating whether it’s time to start planning for your life after death, connect with a Lancaster trust lawyer at Mack & Mack Attorneys today. We believe that it is never too soon to start planning for afterlife care. We want to make sure that everyone in your life can receive whatever assets and protections you want to leave behind. Let’s connect as soon as possible and get your estate in order. That way, you can advance in life knowing that everything is taken care of.