Trusts FAQs

Estate planning can seem like an overwhelming process. At the very least, you likely know that you should create a will. However, what many people don’t consider are trusts. Not many people fully understand these legal tools, so there may be several misconceptions regarding trusts. A trust can be beneficial in helping you achieve what you want when it comes to distributing your assets to loved ones, so it’s important that you understand what they are and whether or not you need one.

The estate planning attorneys of Tressler & Associates can answer all of your questions regarding trusts and help you determine if one is right for you. Here are a few trust questions that people commonly ask.

How Does a Trust Work?

Like a will, a trust dictates who you’re passing which assets to. A trust is a legal arrangement where you (the grantor) give permission to a third party (the trustee) to hold certain assets on behalf of someone else (the beneficiary). Trusts can provide you with more control over your assets and how your beneficiaries use them, as well as other benefits you won’t get through a will alone.

Irrevocable vs. Revocable Trusts

The various types of trusts available can be split into two categories – irrevocable trusts and revocable trusts. When looking into creating a trust, many people wonder what the difference between the two is and which one will fit their needs better.

• Irrevocable Trust – An irrevocable trust is one that can’t be changed after it’s created, except under certain circumstances. This requires the grantor to give up their legal ownership of assets placed in the trust. As they are no longer the legal owner, this helps provide more protection for the assets, such as keeping them safe from creditors.
• Revocable Trust – Also referred to as revocable living trusts, these types of trusts allow the grantor to maintain more control over their assets while they’re still alive. The grantor can change the terms of the trust as they like, such as removing a beneficiary. However, this means these trusts do not provide the same protections during their lifetime as they would have with assets placed in an irrevocable trust.

What Types of Trusts Can You Create?

While irrevocable and revocable trusts are two broad categories of the types of trusts you can create, there are many more types. There’s no one trust that’s better than another, as they each serve specific purposes. Working with a trust attorney can help you find the trust that works best for you.

Some of the common types of trusts include:

• Martial Trust – Married couples can use a marital trust to pass the deceased spouse’s assets to the surviving spouse tax-free. These are typically used alongside another type of trust, a credit shelter trust, to reduce taxes for their heirs, typically their children.
• Charitable Trust – If you have a charitable organization that’s important to you, a charitable trust allows you to leave a charitable gift and also has benefits for you and your heirs. There are two types of charitable trusts – charitable lead trusts and charitable remainder trusts.
• Minor’s Trust – A minor’s trust allows you to set assets aside for a minor until they reach the age of majority or a later age. These trusts provide special tax benefits for the beneficiary.
• Special Needs Trust – If you care for a special needs loved one, a special needs trust allows you to leave them assets without disqualifying them for government benefits like Medicaid.
• Spendthrift Trust – A spendthrift trust can be beneficial if you’re worried about how a loved one will use their inheritance. This helps protect the assets you leave them.
• Generation-Skipping Trusts – A generation-skipping trust allows you to skip your children and instead leave assets to your grandchildren while avoiding taxes.

Why Should You Create a Trust?

The reason someone may want to establish a trust can vary, as there are many good reasons for doing so. Often, the most common reason for creating a trust is that they give you more control over your assets and help your loved ones avoid going through the probate process. However, there are also other specific reasons why a trust might interest someone, such as the privacy protection trusts have compared to wills. An estate planning attorney can help explain the exact benefits a trust can provide to your unique situation.

Do You Still Need a Will When You Have a Trust?

When your assets are taken care of by a trust, you might be wondering if there’s any reason you would also need a will. However, it is still advisable that you have a will. An estate planning attorney can help ensure that your trust and will work together if you’re utilizing both.

Find Out if a Trust Is Right for You

Everyone should have a will, but who requires a trust in their estate plans will vary. However, trusts aren’t only for the very wealthy, as some might assume. Whether or not you’ll need a trust, you want to feel confident in your choices. At Tressler & Associates, we can help ensure that your estate plans contain everything they need to ensure your wishes are followed the way you wanted.

Contact our trust attorneys today to learn more.