Cape Cod Trust Lawyers Offering Options to Protect You and Your Family
A trust is a way of protecting your assets and defining what will happen with them once you become incapacitated or pass away. Generally speaking, trusts are one of the main pieces in modern estate planning. Setting up a trust involves transferring ownership of your assets to the trust in different capacities and then establishing rules for their distribution for the next generation. Trusts have many advantages such as provisions for incapacity care, probate avoidance, and tax avoidance. A trust is a private document that typically does not need to go through a court in order for your assets to be transferred, and it is typically an easier and less costly way to pass down your wealth which can be used in conjunction with a will.
Some of the most commonly used trusts are Revocable Living Trusts and Irrevocable Trusts. Here, the term “revocable” means it can be amended or revoked at any time, and the term “living” means that it has been funded — in other words, assets have been transferred to the trust, and the title is now in the trust and no longer owned by you personally.
An Irrevocable living trust cannot be changed once it has been created, unless there is consent from the beneficiaries to do so. Assets placed in an irrevocable trust cannot be taken back. Trustmakers give up ownership and control of assets put in an irrevocable trust, and by doing so, the trust removes taxable estate from the benefactor’s assets, resulting in possible tax savings.
Some trustmakers choose to set up a Personal Asset Trust ™ . A Personal Asset Trust ™ is a different way of passing on your wealth but still retaining control over who, where, and how you wish funds and assets to be spent. You can stipulate conditions and keep the family money in the family. Furthermore, you can help insulate and protect your inheritance from creditors and lawsuits that your beneficiaries may be subject to once they receive the money.
Many families are choosing to focus on legacy continuation and add it as an objective for their Estate Planning. With that in mind, another trust option available is the IRA Inheritance Trust™. An IRA Inheritance Trust ™ is a special kind of revocable living trust designed to become the beneficiary of your IRA after you die. It has been recently approved by the IRS as a way of providing your beneficiaries with both protection from creditors and the ability to take advantage of the ability to “stretch out” RMDs (Required Minimum Distributions) over the beneficiary’s lifetime instead of being limited to 10 years. The money inside an IRA may now compound for much longer, and it is tax-deferred.
What Type Of Trust Can Be Used To Protect and Manage My Assets in Case of Disability?
With few exceptions, trusts are generally very flexible and tailored to your needs. At Boyd & Boyd, we have trusts created especially for cases in which the trust creator is in the early stages of Alzheimer’s or wants to have plans in place to ensure their care and protect their assets in case they become disabled or incapacitated. You may also set up a Special Needs Trust for yourself or a beneficiary who needs to remain eligible to receive government benefits and still get to enjoy the resources that improve their quality of life. In such cases, pre-defined rules can be added to the trust in order to protect the assets in it and stipulate how the money can be spent.
While each case is different — a loved one may currently have special needs care and no longer need government benefits in the future, or become disabled in the future and need those benefits that they may not need today — a special needs trust may provide the certainty that you or your loved one will be cared for when the need arises.
How Can I Find Out Which Type Of Trust Is Right For Me?
Navigating the different estate planning options and trusts can be overwhelming and time-consuming for most clients. Strategic planning and periodic updates to your trust and estate plan are fundamental to ensure your assets and wealth will be passed on according to your wishes. At Boyd & Boyd, we have helped many families walk through the process by providing legal advice and explanations in plain terms to assist you in making the right choices to have a strong estate plan in place.
Talk to our legal team in Hyannis by calling (508) 775-7800 and requesting a free initial estate planning consultation.