Trusts: A Lasting Legacy

Trusts are an often underutilized, but extraordinarily efficient, tool for managing your estate during your lifetime, and after your death. A Trust is a legal entity that is created and governed by a Trust Instrument, which is essentially an operating agreement for the trust to follow. A Trust can own property, real or personal, and is managed by a person called a Trustee. The Trust Instrument outlines rules for distribution, and has specific identified beneficiaries. An Irrevocable Trust is a Trust where the Grantor transfers assets into the trust with no power to take them back once conveyed. A Revocable Trust, on the contrary, allows a Grantor full control to relinquish the Trust during their lifetime. Beneficiaries of a Trust can be the person who started the trust, called the Grantor, as well as relatives, friends, businesses and charitable organizations.

Trusts can be used for a multitude of reasons, and are usually created to protect assets from loss, provide for dependents, and to create, or refine, strategies for maximizing generational wealth. Trust assets can vary, and may include real property, liquid assets, jewelry, art or other valuable items, life insurance, or lawsuit proceeds. A Trust must actually own property to be validly created, and, subject to applicable state laws, a well-drafted Trust can operate for generations. To shield your assets from loss, Medicare Planning Trusts, Special Needs Trusts, and even Mental Health or Substance Abuse trusts can protect Trust assets and maintin a beneficiary’s government entitlements in the event of a catastrophic injury or long-term illness. Spendthrift provisions in trusts can protect Trust property from loss due to a beneficiary’s bankruptcy, insolvency or other financial mismanagement.

In the context of gifting, a trust can be used to provide a structured distribution to your dependents, and can operate in your absence without requiring constant oversight. Much of the property that is transferred into a trust passes through a decedent’s estate outside of probate and with relative ease, and minimal taxation, as the Trust Instrument governs how the trust property should be maintained or distributed.

When considering creating a trust, you should identify the goals of your trust and the classes of people it is designed to benefit. The goals of your trust, whether they include financing your grandchildren’s college tuition, or protecting your assets from being entirely depleted as a result of a nursing home stay, will determine the best type of trust for your situation. Trusts can be revocable or irrevocable, and the specific parameters contained within the instrument should be tailored to meet your needs. Working with an estate planning attorney, and often a financial advisor, you can structure a trust that will provide for the protection of your beneficiaries, minimize tax implications and outline clear directions for the distributions of principal and income.

Shabrei M. Parker is a Partner at Mincey Fitzpatrick Ross, LLC where she specializes in estate planning and administration. You can reach her online at:

www.minceyfitzross.com/attorneys/shabrei-m-parker/

#Lawyer #LawFirm #EstatePlanning #EstatePlan #Trust #RevocableTrust #IrrevocableTrust #Will #PowerofAttorney #SpecialNeeds #AssetProtection

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