Estate planning is integral to ensuring your assets are protected and allocated according to your wishes after your death, and trusts are some of the most effective estate planning tools. Trusts are versatile, tailored to fit various circumstances, and help your family avoid costly probate. A Buckeye trusts lawyer provides invaluable advice and assistance in setting up a trust tailored to your needs.
At Pennington Law, PLLC, our Buckeye trusts lawyers are committed to helping you set up a trust that provides for your family’s future. We understand that creating a trust can be complex and daunting, so we strive to make the process as simple as possible. Contact us today and learn more about our estate planning and trust services through an initial consultation.
What is a Trust?
A trust transfers ownership rights of property, assets, and investments from one person to specific beneficiaries. Trusts come in various shapes and sizes, but all have some aspects in common.
The person who creates the trust is the grantor. This person is also responsible for funding the trust by transferring property into it. The person taking the legal title of the trust assets is the trustee, who is responsible for managing the trust following its terms.
Trusts are flexible and can be customized to meet specific needs. For example, depending on your situation, you might create a trust with a special purpose, such as providing for a child or a charitable cause.
Types of trusts include revocable trusts, irrevocable trusts, special needs trusts, charitable trusts, spendthrift trusts, and irrevocable life insurance trusts (ILIT). Each trust provides tax advantages, helps with estate planning, provides benefits to children or other family members, and protects assets from creditors.
What Are the Benefits of Creating a Trust?
A trust is an important estate planning tool that benefits the trustor, beneficiary, and other stakeholders. It allows for effective asset management, protection, and peace of mind knowing your assets are managed according to your wishes. The benefits of creating a trust include:
- Protecting Your Assets – A trust safeguards your assets from creditors and other potential claims.
- Controlling Asset Distribution – You can specify how and when assets are distributed and who receives them.
- Avoiding Probate – Trusts help you avoid the costly and lengthy probate process.
- Managing Assets – A trust lets you keep control of your assets while you are alive and after death.
- Tax Savings – Some trusts offer tax savings and other financial benefits.
- More Privacy – Trusts may give you more privacy than if you distribute your assets through a will.
What’s the Difference Between a Revocable Trust and an Irrevocable Trust?
A revocable trust allows the grantor to modify it after it is created. This type of trust provides flexibility in managing and distributing assets. On the other hand, the grantor cannot change an irrevocable trust after its creation. Both revocable and irrevocable help protect assets, avoid probate, and create certain tax benefits.
What Is an Irrevocable Life Insurance Trust (ILIT)?
An irrevocable life insurance trust (ILIT) is a powerful estate planning tool that helps minimize income and estate taxes. An ILIT is an irrevocable trust created specifically to hold one or more life insurance policies outside the insured’s estate.
When a life insurance policy is part of an estate, the Internal Revenue Service (IRS) will add the life insurance benefit amount to the amount of the taxable estate. By creating an ILIT, the insured creates a separate legal entity from their estate, so the life insurance is not part of the person’s estate and therefore is not subject to estate tax. An ILIT also offers other benefits, such as allowing the insured to choose a trustee, select beneficiaries, and name alternate beneficiaries.
ILITs are complex legal instruments, so seek the help of an experienced Buckeye trusts attorney to set one up.
What Is a Special Needs Trust (SNT)?
A Special-Needs Trust (SNT) is a trust created to protect the assets of a person with a disability. These trusts provide additional benefits or services to people with disabilities, allowing them to maintain their quality of life without the risk of losing eligibility for government benefits.
An appointed trustee manages all and any spending, and the beneficiary has no control over assets inside the trust. This is important because the beneficiary does not own the assets, so they should remain eligible for government programs that limit assets.
There are three main types of Special Needs Trusts:
A non-profit organization manages a pooled trust, which contains the pooled assets of many individuals with disabilities. First-party trusts hold assets belonging to the beneficiary before their disability, while third-party trusts contain assets transferred from another source.
What Are Other Common Trusts?
Trusts are a powerful and versatile estate planning tool. While some trusts, such as revocable and irrevocable trusts, are more commonly used, several other types of trusts may benefit individuals and families. Some common trusts include:
- Credit Shelter Trust – Provides asset protection after the first spouse’s death. These trusts allow assets to pass directly to children or other beneficiaries, free of federal estate tax.
- Generation-Skipping Trust – Helps avoid the generation-skipping transfer tax. It does this by skipping over generations and transferring the assets to those further down the line, such as grandchildren.
- Qualified Personal Residence Trust – Transfers a primary residence or vacation home to someone else at a discounted rate for gift and estate tax purposes. The grantor retains the use of the property before it transfers to the beneficiary.
- Qualified Terminable Interest Property Trust – Helps pass assets to a surviving spouse or other beneficiaries upon death while avoiding estate taxes.
- Charitable Trust – Transfers assets to a charitable organization and provides tax advantages in return. These irrevocable trusts effectively reduce your estate and income tax liability.
- Children’s Trust – Provides financial support for minor children until they reach a certain age, with any remaining assets distributed among the beneficiaries. The trustee manages and disburses assets from the trust for the child’s benefit until they reach adulthood.
- Spendthrift Trust – Protects the beneficiary’s assets from creditors and helps manage the beneficiary’s finances. This type of trust prevents the beneficiary from spending or transferring the assets to another person or entity, ensuring the assets remain secure.
How Can a Buckeye, AZ, Trusts Lawyer Help Me?
Trusts are a great way to secure your assets and provide for your loved ones, but the process of creating one may seem overwhelming. Working with a qualified trusts lawyer in Buckeye, AZ, can ensure your estate plans are properly drafted, executed, and managed. Here are some of the ways a trusts lawyer can help you:
- Drafting Trust Documents – A trusts attorney can assist you in drafting a trust document that meets your needs and complies with Arizona state law.
- Advising on Tax Issues – Your lawyer can advise you on the tax implications of setting up a trust.
- Designating the Trustee – Your estate planning attorney can help you choose the right trustee responsible for managing the trust.
- Reviewing Trust Documents – An estate planning lawyer will review documents prepared by another party to ensure they are legally valid and appropriate for your situation.
- Managing Trusts – An experienced lawyer could help with the administration of your trust. This includes helping you manage assets within the trust, filing appropriate tax returns, and ensuring the trust complies with all applicable laws and regulations.
At Pennington Law, PLLC, we offer dependable, experienced counsel to help you navigate the complexities of creating a trust. Our estate planning attorneys give clear and accessible legal advice tailored to our client’s circumstances. Whether you want to set up a trust to protect your assets or need guidance on administering an existing trust, our lawyers are here to help. We offer a variety of trust-related services, including:
- Trust Drafting and Review
- Beneficiary Representation
- Estate Planning Advice
- Trust Administration
- Tax Planning Advice
- Business Succession Planning
- Asset Protection Planning
Contact a Buckeye, Arizona, Trusts Attorney Today
When it comes to setting up trusts or understanding the intricacies of estate planning, you don’t have to go it alone. Pennington Law, PLLC can help. Our experienced Buckeye, Arizona, trusts attorneys create trusts that suit your situation and protect your family’s financial future. We will work diligently with you to ensure that your assets are adequately protected and that the trust best serves your interests.
If you’re considering setting up a trust or estate plan, let us help you protect your future. Contact us today for a free consultation.