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Trusts

KENTUCKY ESTATE PLANNING ATTORNEYS
Along with the creation of a will to plan for the future distribution of your assets, you should also consider the creation of a trust. There are many different types of trusts, but all have the same general purpose of setting aside certain assets to be protected for the benefit of others. The creator of a trust arranges for a trustee to have legal title to certain property to be held for the benefit of third party beneficiaries, such as minor children.
The creator of the trust can also be the trustee, but the creator may also choose to have some other individual be the trustee in the event the creator is not able to carry out the responsibilities of ensuring the trust property is protected for the beneficiaries. Trusts can also avoid probate and estate taxes, making this an asset management tool that will not be subject to dispute, if the trust is properly planned and organized.

HOW TO CREATE A REVOCABLE LIVING TRUST
While you certainly can create a separate bank account and set it up as a trust for the benefit of another so long as the purpose of the trust is valid (i.e., not fraudulent), you can also create a revocable living trust that looks a lot like a will. The revocable living trust is created during your lifetime as opposed to being created at the time of your death.
A revocable living trust allows for a transfer of property at your death without probate and the process is very quick. This type of trust is deemed a revocable living trust if you reserve the right to take some of the property back during your lifetime, and you can change the terms of the trust. You can also make the trust irrevocable, but in such a case once you give up the property for the benefit of another, you are giving up the right to get that property back.
In order to create a revocable living trust, you will need the following information:

  • The name of who is creating the trust (grantor);
  • The name of who is to be the trustee (most of the time the trustee is also the grantor);
  • Who is to become the trustee once the grantor/original trustee dies (this person becomes the successor trustee);
  • The names of the beneficiaries who are to receive the property that is being held in trust for them; and
  • The name of the person who will manage the property if the beneficiaries are minors at the time of the grantor’s death.

Trusts are great tools to accomplish your goals while avoiding the probate process, however, you can’t accomplish certain goals with a revocable living trust as you can with a will. For example, you cannot name a guardian to your minor child in a living trust the way you can in a will. This makes perfect sense because a revocable living trust simply protects assets for the benefit of others. It is for this reason that in most plans both a will and a revocable living trust are used. An experienced estate planning attorney can help you determine what estate planning documents are the best options for your particular situation.

OTHER TYPES OF TRUSTS
If you do not have a revocable living trust, you can have a trust that is created by the language of your last will and testament that would become effective upon your death, thus called a “testamentary trust.” However, this type of trust would not avoid probate, as the will has to be probated. Further, it is more difficult to change a testamentary will because you would also have to change the will document itself. In addition, the beneficiaries will have to seek court approval on a monthly or a yearly basis to receive permission to withdraw assets from the trust for their needs. As you might imagine, this often leads to increased court fees and attorneys fees.

There are also trusts that may be created for specific purposes. For example, you may wish to create a trust that holds property that is protected from creditors. This is called an Asset Protection Trust. These trusts are considered irrevocable and are living trusts.

If you have substantial property, you may also consider a Credit Shelter Trust that allows married couples to avoid estate tax when one spouse dies. You may also consider creating a Life Insurance Trust. This type of trust is irrevocable and will also avoid estate taxation like the Credit Shelter Trust.

Another type of “purpose” trust is the Special Needs Trust. If you are someone who receives government benefits, you may need to have this type of trust set up so that you can have a source of income without being disqualified from receiving your government benefits. This type of trust often arises when you are awarded money from a lawsuit and the proceeds need to be protected. A Special Needs Trust allows you to collect those proceeds without compromising your ability to continue receiving government benefits.

There are other types of trusts that may be beneficial to your particular situation that are not described above. You should speak with an estate planning attorney who can explain the different types of trusts available, and recommend certain trusts that will meet your wishes and needs.

CONTACT US TODAY TO SCHEDULE YOUR FREE CONSULTATION
If you are thinking about setting up a trust for the benefit of your loved ones, or if you have any other estate planning questions or concerns, contact the attorneys at the law firm of Goeing Goeing & McQuinn today to schedule a free consultation. Our attorneys will evaluate your situation and help you determine what the best steps are to take in order to protect your assets and ensure any property you set aside for your beneficiaries are protected. A trust is a good way to plan for your future and ensure that your children will be taken care of. Call our office today at (859) 904-2045.