Elder Law | Trusts
Elder Law | Attorneys can help with all aspects of developing a trust and managing it. A trust is basically an arrangement where a trustee holds assets on behalf of the beneficiaries. Since trusts typically avoid probate courts, they allow beneficiaries to easily access the assets following a death. If the account is set up as an irrevocable trust, it will normally not be considered a part of the taxable estate. This feature means that the trust may be able to escape with fewer taxes following a death.
The Benefits of a Trust
As any elder law attorney knows, a trust provides exceptional control of wealth. With a trust, individuals can decide on the terms, distributions and beneficiaries precisely. A revocable trust can be used so that assets can still be accessed during the individual’s lifetime. Trusts can also help to protect the individual’s legacy by protecting the estate if an heir has significant creditors or money management problems. Other than saving money on probate court costs, a trust also allows the financial transfer to remain completely private.
The Difference Between a Revocable and Irrevocable Trust
While there are many different trusts available, the main distinction is between revocable and irrevocable trusts. A revocable trust is known as a living trust because it allows the grantor to maintain control during their lifetime. The individual can choose to access or dissolve the trust at any time. While a revocable trust will generally avoid the probate process, it will still be susceptible to estate taxes. In essence, the revocable trust is treated like any other asset while the individual is still alive.
With an irrevocable trust, individuals transfer their assets from their estate to the trust. While it avoids the cost of most estate taxes and probate costs, an irrevocable trust cannot be dissolved or accessed during the individual’s lifetime. Once the irrevocable trust has been created, the individual loses all control over the assets. Due to this, an irrevocable trust is a better option for people who will not need to access it and who want to reduce tax liabilities.