Trust Attorneys in Chesterfield, MO, Helping Clients Protect Their Assets for Future Generations
Trusts have become a popular estate planning tool for those wanting more control over how their assets are distributed. But how does a trust work – and how do you know which one is right for you? Our trust attorneys walk you through what you need to know about trusts and explain why working with an attorney may help make the process easier.
What Is a Trust?
In simple terms, a trust is an estate planning tool that serves as a sort of “container” or “bank account” for your assets. The person creating and funding the trust is called a grantor or a trustor. The person or entity administering the trust is called a trustee, and the trustee can be the same person as the trustor, a different person, or even a professional trustor such as a law firm. It exists as a separate entity and holds any assets you place into it until you pass away. When that happens, property in the trust is distributed directly to any named beneficiaries.
Trusts have many advantages, such as probate avoidance and protection from estate taxes. They also allow the trustor greater control over how and when trust assets should be distributed. However, trusts require more upfront work and investment as they must be funded and continuously managed, so there may be better choices for some. A trusts lawyer can advise you on whether a trust is a good choice.
How Is a Trust Different From a Will?
There are many differences between trusts and last wills. First, a trust is created and funded while the trustor is still alive. Certain types of trust allow the trustor to add or remove assets at any time, change beneficiaries, and modify trust provisions for how the assets should be distributed. They can also be canceled at any time. Assets placed in a trust are transferred directly to the trust beneficiaries once the trustor dies and thus do not need to go through probate.
On the other hand, a last will is a document created while the individual is still alive but will not go into effect until after they pass away. All assets listed on a will continue to be part of the individual’s estate and must be probated before being transferred to the decedent’s beneficiaries. A last will does not require any upfront funding or management; however, it does not give you as much control over how your beneficiaries may receive their inheritance. In other words, once a particular asset is probated, it will likely be transferred to its rightful beneficiary in a single transaction. It is common for a person to have both a last will and a trust as they can work together for those with more complex estates or particular estate planning goals.
What Are Some of the Most Common Types of Trust?
There are a wide variety of trust types suitable for a wide range of estate planning needs. An attorney can help you select a trust that aligns with your estate planning goals. Some of the most common types of trust include:
- Living Trust – A living trust is created during the trustor’s lifetime and can be made revocable or irrevocable. A revocable trust allows the trustor to make changes to the trust or even revoke it entirely during their lifetime, whereas an irrevocable trust cannot be modified or terminated without the consent of all beneficiaries named in the trust.
- Charitable Trust – A charitable trust allows a trustor to make a tax-deductible charitable contribution while retaining income generated by the assets in the trust. Charitable trusts can be either revocable or irrevocable.
- Testamentary Trust – This trust is created as a part of a last will and only goes into effect after the trustor’s death. The terms of the trust are established in the will, and a trustee is appointed to manage the assets.
- Special Needs Trust – This trust is designed to provide financial support for a family member with special needs while preserving their eligibility for government benefits.
- Asset Protection Trust – This trust shields assets from potential creditors or legal judgments by placing them in the trust. Asset protection trusts can be domestic or offshore and are often used for Medicaid planning.
Some individuals may find that having one or several types of trust may benefit their overall estate planning strategy. Always consult an attorney to determine whether a trust is right for you.
Do I Need a Trusts Attorney to Create a Trust?
As you may know, there is an endless list of trust types to fit every estate planning need, and each has its advantages and disadvantages. Trusts can be quite complex to create, fund, and manage, and for these reasons, your first step should be to consult a skilled trust attorney.
At Mid-America Law Practice, LLC, our trust attorneys can walk you through your options and make recommendations based on your profile and goals. Let us guide you in your estate planning journey – call our Chesterfield, MO office at (314) 347-3567 and request a free consultation to get started.