The term “trust” in a legal context refers to property that is held by one party for the benefit of another. Trusts are created by an individual who transfers property to a fiduciary called trustee that holds that property for the individual’s beneficiaries. As an estate planning tool, trusts help to make sure that one’s assets and property are distributed in accordance with an individual’s wishes.
Asset Protection Trust
Property placed in these types of trusts to protect property against creditors, litigious minded individuals and nursing home costs. These types of trusts also provide some control over the type of property that is inherited from a deceased individual’s estate.
If an individual wishes to leave assets or property to a specific charity, cause or organization, these types of trusts are a wise idea. These trusts have the additional benefit of reducing potential estate taxes.
These trusts allow a spouse to leave everything to a surviving spouse while designating that certain property be placed into a trust to maintain tax benefits.
Irrevocable trusts are either created during the individual’s lifetime or they are revocable trusts which become irrevocable after the settlor’s (or the survivor of multiple settlors’) death. An irrevocable trust not only avoids probate but also initiates the process of protecting assets in case of a future crisis. Irrevocable trusts are “irrevocable” because an individual cannot change the terms of the trust or designated beneficiaries once the trust is created or the settlor, who could revoke them during his or her lifetime, has passed away.
A revocable trust, which is created during an individual’s lifetime places an individual’s property into a trust while still allowing the individual to retain control of the property. Because the trust is “revocable”, an individual can amend or revoke the terms of the trust at any point during the individual’s lifetime. A revocable trust, while does not provide any protection from the creditors, allows an individual to avoid probate. It is important to know that a revocable trust will become irrevocable upon the death of an individual authorized to revoke it.
Special Needs Trusts
This type of trust continues to ensure that person with special needs, who is a beneficiary of a trust, continues to be eligible for government benefits. The beneficiary of a trust would not be allowed to control how often trust benefits are distributed or in what amount that property from the trust is received. These types of trusts often prove essential in planning for the estates of a loved one with special needs.
These types of trusts restrict beneficiaries from selling any interests in the trust because all assets or property that are placed in this type of trust are protected from creditors of the beneficiary until distribution of the trust’s property.
Regardless of which type of trust an individual ultimately chooses, a trust can prove enormously beneficial in estate planning by helping to achieve an ultimate purpose. Because the law surrounding trusts is quite intricate, individuals who are interested in using a trust for estate planning purposes are welcome to consult with Law Office of Elena Tsizer.
Resources for Trusts
Massachusetts State Asset Protection Laws
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