Elder Law Planning for Wealth Management
If you or your spouse own any real property or any financial assets, you may want to consider establishing a trust to direct the control and use of your property during your lifetime and to provide for its distribution after your death. Another important legal document for your estate planning is a will, which states your desired distribution of your assets, who should get what, after your death.
A trust is a legal document created by a grantor, managed by a trustee, to provide for a beneficiary. Property, real or financial, is transferred according to the wishes of the grantor into the trust. A trust may be revocable, meaning it may be altered or even abolished by the grantor, or irrevocable, meaning that once it is established, it cannot be changed or cancelled.
You might choose to set up a revocable trust if you wish to direct the use of your property and assets during your lifetime. As grantor, you would decide whether all or part of your income, financial assets, and property would be directed to the trust. You would specify who the beneficiary or beneficiaries of the trust would be during your life and after your death. You could act as the trustee of your own trust or appoint another individual or institution to be trustee and manage the trust. And you could decide to change terms of the trust at any time. Assets in a trust are not subject to probate upon the grantor’s death and will become the property of the trust’s beneficiaries. So the lengthy and expensive process of probate is avoided; however, property in the trust is not protected from the grantor’s creditors who can file a claim against the trust. Upon the death of the trust grantor, it becomes an irrevocable trust.
An irrevocable trust cannot be changed, modified, or discontinued, even by the grantor. Once property is transferred to the irrevocable trust, it belongs to the trust and its use is governed by the terms of the trust. Some irrevocable trust terms allow protection from estate taxes in large value estates.
Trusts for Specific Financial Goals
Several other types of trusts may be useful for your estate planning. A charitable trust is established for the benefit of a charitable organization. It may allow the grantor or other beneficiary to have access to the assets, and upon the death of the grantor, the value of the assets goes to the designated charity. This is a useful instrument to help reduce estate and gift taxes. A special needs trust is an important consideration for parents of a disabled child who is receiving government benefits. The terms of the trust prevent the assets from causing the special needs individual to be disqualified for government benefits but provide funding for medical, dental, and other care, not covered by Medicaid or insurance, and for education, transportation, entertainment and other quality of life purchases. There are strict definitions of what constitutes disability and an extensive list of needs appropriately funded by a special needs trust.
Your estate planning attorney, Glenn A. Deig, will help you establish the type of trust most appropriate for your situation.
Often considered the most basic of legal documents dealing with property, a will sets out your desires of who should receive your property after your death. Without a will, your estate will be distributed among your legal heirs according to the decisions of the court, and this may be quite different than your plans. It is important to make sure you include all assets in your will except those which have a named beneficiary, such as investment accounts, insurance policies, and trusts. Also, consider the need to appoint a guardian for underage children or disabled family members, as well as to stipulate how the assets of your estate will be distributed to them. The person whom you name as executor of your estate in your will assumes responsibility for carrying out the terms of your will and meeting any legal and tax requirements appropriate for your estate.
Glenn A. Deig, as your estate planning lawyer, is skilled in providing information and advice dealing with wills and estates.