Although many people associate trusts with having a large estate, trusts can serve several important purposes for middle-class individuals and families. The best way to find out if one or more trusts can be beneficial for you is to consult with a knowledgeable trust and estate attorney. If you live in Southeastern Massachusetts or on Cape Cod, contacting the skilled attorneys at Surprenant & Beneski is a wise choice.
What Exactly Is a Trust?
A trust is a fiduciary arrangement established by a trustor (also grantor or settlor) in which a third party — the trustee — holds assets on behalf of a beneficiary.
What Creating Trust Can Accomplish
Whatever the size of your estate, it represents your hard work, owned property, and accumulated wealth and has great significance for you and your loved ones. Therefore, it is deserving of protection from anything that might negatively impact its value or interfere with its effective distribution after your death. A trust can accomplish the following:
- Avoid probate, often a costly and time-consuming process
- Reduce tax liability by transferring assets into an irrevocable trust
- Protect minor beneficiaries by holding their inheritance until they reach maturity
- Protect children’s assets from going to an ex-spouse if they divorce
- Protect a disabled beneficiary’s eligibility for government benefits by putting their inheritance in a supplemental needs or special needs trust
- Maintain a line of inheritance so that if you leave your estate to your spouse, you can direct which beneficiaries it will go to after your spouse passes away using a spousal or bypass trust
- Ensure the ongoing care of a beloved pet with a pet trust in case you predecease the pet
Two Types of Trusts: Revocable and Irrevocable
As expected, a revocable trust can be amended or revoked throughout the grantor’s lifetime, while an irrevocable trust is permanent and cannot be easily modified.
What Revocable Trusts Accomplish for You and Your Family
Revocable trusts create a number of advantages for middle-income families, including:
By creating a revocable trust for one’s child, an elderly person gives over the management and control of the funds during their lifetime and ensures that when
they pass, the child will automatically inherit.
In a state like Massachusetts in which probate costs are relatively high, a revocable trust can help your family avoid the expense of probate. Having funds in a revocable trust can also do away with the need for your beneficiaries to wait for the state to settle your estate to receive their inheritance.
Protecting your privacy
Having your funds in a revocable trust also removes your property ownership from the public record and allows you to keep your family’s financial matters private.
What Irrevocable Trust Funds Accomplish for Your Family
Irrevocable trusts can also save you and your loved ones money by:
Reducing your tax burden
Once you transfer property or other assets to an irrevocable trust, they are no longer part of your taxable estate. This allows your assets to pass to your beneficiaries without the burden of an estate tax. Even if you don’t have sufficient assets to qualify for the estate tax, having such a trust will reduce your tax liability during your lifetime.
Making sure the inheritance you leave is used wisely
Putting funds for a minor child in trust enables you to teach them financial responsibility by, for example, stipulating that they must meet particular criteria to inherit funds, such as graduating college or being gainfully employed.
Protecting your assets from litigation
Since the assets you put in an irrevocable trust no longer legally belong to you, they can not be tapped to pay a settlement for a liability claim. This will protect you and your family from losing money if a civil lawsuit verdict goes against you.
Contact Our Experienced Trusts Attorneys Today to Find Out More
At Surprenant & Beneski, our capable trust and estate attorneys have a broad spectrum of clients with varying assets and income levels. All of them benefit from understanding the benefits of various types of trusts. Once we understand the specifics of your financial and familial situation, we will be able to advise you accordingly. Contact us now to find out how creating trusts may be invaluable to you and your family.