The answer is: not really. All trusts are set up to manage assets while a person is alive. Differences in trusts are more stylistic, depending upon what benefits the grantor is seeking to achieve. A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a named beneficiary. They can be arranged in different ways and can specify exactly how and when the assets pass to the beneficiaries. Trusts usually avoid probate, leaving the assets immediately accessible to beneficiaries.
Living trust by definition: If a trust is set up as revocable, its assets remain in your control and beneficiaries can be changed at any time. If it is irrevocable, it is still set up in your lifetime; however, you lose control of its assets, which must remain intact or lose their status as trust funds.
The Benefits of a Trust
- Control of your wealth. You can specify the terms of a trust precisely, controlling when and to whom distributions may be made. You may also, for example, set up a revocable trust where assets are fluid and remain accessible. Beneficiaries can also be changed.
- Protection of your legacy. A properly constructed trust can help protect your estate from your heirs’ creditors or beneficiaries, who may not be adept at money management or of sufficient age.
- Privacy and probate savings. Probate is a matter of public record; a trust may allow assets to pass outside of probate and remain private, in addition to reducing or avoiding estate taxes.
Types of Trusts
- (Type A) provides benefits to a surviving spouse; generally included in the taxable estate of the surviving spouse.
- (Type B) provides benefits to a surviving spouse; generally included in the taxable estate of the surviving spouse.
- (Credit shelter) bypasses the surviving spouse’s estate to make full use of any federal estate tax exemption for each spouse.
- (Testamentary) is created through the will after the death, with funds subject to probate and transfer taxes. It often continues to be subject to probate court supervision.
- (ILIT) excludes life insurance proceeds from the deceased’s taxable estate while providing liquidity to the estate and/or the trusts’ beneficiaries.
- (Charitable lead) allows certain benefits to a charity and the remainder to your beneficiaries; with (Charitable Remainder) a charity receives what is left of a trust.
- controls generation taxes on distributions
- (QTIP) provides income for a surviving spouse. Upon the spouse’s death, the assets revert to additional beneficiaries named by the deceased.
- (GRAT) is an irrevocable trust funded by gifts by its grantor. It is designed to shift future appreciation on quickly appreciating assets to the next generation during the grantor’s lifetime.
A Word About Trusts
Estate planning is one of the most important financial vehicles you must protect your assets and ensure they are properly distributed upon your death. They are highly personal documents. One size does not fit all.
Contact Our Office Today!
If you are considering setting up a trust it is important that you speak to a qualified estate planner who can suggest the appropriate trust or whether a trust is beneficial to your estate planning goals. The Voeller Law Firm specializes in estate planning. Protect your assets. Call us now for a free consultation. The Voeller Law Firm, located at 19311, FM 2252, Suite 103, San Antonio, Texas 78266. (210) 651-3851
