Knowledgeable Assistance Setting Up a Trust in Arizona
Experienced lawyer creates instruments specially tailored to meeting your estate planning goals
Depending on your financial circumstances, a will may not be the best or only way to transfer assets to your heirs. Your estate may be complex and probating your will may take too much time. Your estate may be large enough to trigger the federal estate tax. A beneficiary might not be mature or responsible enough to manage a substantial inheritance. For these reasons and others, you might be well served by establishing one or more trusts. At Pennington Law — Estate Planning, PLLC, I help clients select the type of trust instrument that addresses their concerns for the present and into the future.
What is a trust?
A trust is a legal entity that you create to become the legal owner of designated property. That property is managed by a trustee — either yourself or an appointed person or institution — during your lifetime. Upon your death, the property can continue under the trustee’s management or be transferred to named beneficiaries according to your wishes. A trust can also be created as part of a will.
Advantages of a trust
Living trusts — those created during your lifetime — are superior to wills in a number of ways. With such a trust, you can:
- Avoid probate by providing for asset transfers that happen automatically
- Shield your assets against liability or legal claims
- Reduce the size of your estate to avoid the federal estate tax
- Place conditions on the use of property or release of funds
- Provide a loved one with an allowance or income
- Support a special needs person without disqualifying them for government benefits
Trusts are flexible instruments, which I can tailor to meet your specific needs.
Revocable and irrevocable trusts
The two main categories of trusts are revocable and irrevocable. As the name implies, a revocable trust can be dissolved or revised at any time. But once you establish an irrevocable trust, you can’t change it without your beneficiary’s consent.
Common types of trusts
Arizona law allows for a variety of trusts. The most common trusts I create for my clients include:
- Credit shelter trust — Also called a bypass or family trust, this allows a grantor to place enough wealth in trust for heirs so that the remainder, which the grantor passes on via a will, does not trigger estate tax. The assets in a credit shelter trust are not subject to estate tax.
- Generation-skipping trust — Also called a dynasty trust, this enables you to transfer a substantial amount of money tax-free to beneficiaries at least two generations your junior. It’s an excellent way to provide a legacy for your grandchildren.
- Qualified personal residence trust — A QPRT keeps the value of your primary residence or vacation home from being added to your estate, thereby guarding against real property that may appreciate in value triggering the estate tax.
- Irrevocable life insurance trust — This trust removes your life insurance from the taxable estate. It’s an excellent way to leave a tax-free legacy to loved ones.
- Qualified terminable interest property trust — A QTIP trust helps a person in a second marriage provide for the lifetime needs of a second spouse while preserving a legacy for children from the first marriage.
The right trust or combination of trusts can help you achieve your retirement and legacy goals. But to get the most out of your estate plan, you need personalized advice from an experienced estate planning lawyer who’s ready to go the extra mile to serve you.
Contact an Arizona estate planning lawyer to discuss trusts for your estate
Pennington Law — Estate Planning, PLLC helps clients in Surprise, West Sun City and Buckeye establish trusts for asset protection and legacy concerns. Call 623-208-7867 or contact my office online to schedule a consultation. Home and hospital visits are also available.