When preparing for the inevitable, you want to make sure your family and your assets will be protected after you’re gone.
One of the best ways to do that is by setting up a trust.
Most people think that only the wealthy need to set up a trust, but in fact, there are many types of trusts that can help families of all income levels ensure their estate and assets are passed on to the proper people.
Setting up a trust allows you to appoint a third party, called the trustee, to hold assets on behalf of the people you set up to be your beneficiaries.
A trust is a great way to have a little more control over what happens to your assets, particularly in comparison to a will. (A will is only effective once it’s been sent to the probate court, the probate court reviews and accepts it, and then ultimately appoints someone as executor.)
The trust process typically gets your assets to your beneficiaries more quickly than the probate process would, as well, and saves time and money for your family.
A trust allows you to have more power in other ways, too, such as:
You may want a trust if you have minors who are beneficiaries, as well. Using a trust is a great way to leave your assets for the benefit of your loved one but without giving them full control. Your trustee will be in charge of the funds and making the decision about when and how distributions take place, as opposed to your loved one who you may be uncomfortable with in terms of their decision-making abilities.
The two main types of trusts are revocable and irrevocable.
A revocable trust is easy to use because it can be amended or revoked at any time, and there are no tax consequences in the sense that there’s no separate tax ID number that needs to be obtained for that trust and no separate tax filing each year, while you are alive. The trust sits very quietly in the background, and you maintain full control as the trustee of your own trust.
You can move assets inside and outside of that trust as you see fit and amend the trust as things change in your life. Once you’ve passed away or become incapacitated, the successor trustee (named in the trust document) would then take over. At that point it’s just a matter of the successor trustee signing their acceptance – a one-page document saying they are now the trustee of the trust – and then they can manage the assets of that trust.
As the name suggests, an irrevocable trust cannot be altered after it has been executed. Therefore, once you establish the trust, you will lose control over the assets and you cannot change any terms or decide to dissolve the trust.
The main goal of an irrevocable trust is really to protect the assets, either from creditors, estate tax, or Medicaid/nursing home care costs.
Attorney Candice O’Neil has been helping individuals and families protect their assets, plan for the care of loved ones and minor children, and avoid probate for nearly 15 years. In addition, she advises small business owners, assisting with entity selection, business formation, business succession planning, and contract drafting. If you need help with establishing a trust for your family, contact Candice today.
Waiting to take action after your loved one passes away can put the assets at risk and lead to legal and tax complications. Let us get started helping you through this process by contacting us today at (603) 434-1770 or completing our easy online form.