Advanced Planning / Trusts

A trust is a legal arrangement through which a trustee (one or more individuals and/or institutions, such as a bank or trust company) acts as fiduciary and holds legal title to property for the benefit of another person, called a “beneficiary".  The rules or instructions under which the trustee operates are set out in the trust instrument.  Trusts often have two (or more) sets of beneficiaries; one or more persons who currently benefit and another group – often children – who begin to benefit only after the first group has died. The first are often called “life beneficiaries” and the second “remaindermen".

Kinds of Trusts
The responsibilities involved in trust administration depend on the nature of the trust.However, in all cases, you need an experienced and reliable attorney who can ensure that your wishes are carried out exactly as you intend.  This is especially important when setting up a trust for a special needs purpose, or to make sure that your children receive the financial assistance they need at designated milestones that you determine. We can help with all aspects of trust adminstration.

Trusts fall into two basic categories: testamentary and inter vivos.
A testamentary trust is one created by your will, and it does not come into existence until you die. In contrast, an inter vivos trust, starts during your lifetime. You create it now and it exists during your life. There are two kinds of inter vivos trusts: revocable and irrevocable.

Revocable Trusts
Revocable trusts are often referred to as "living" trusts. With a revocable trust, the person who created the trust, called the "grantor" or "donor," maintains complete control over the trust and may amend, revoke or terminate the trust at any time. This means that you, the donor, can take back the funds you put in the trust or change the trust's terms. Thus, the donor is able to reap the benefits of the trust arrangement while maintaining the ability to change the trust at any time prior to death. 

Revocable trusts are generally used for the following purposes: Probate avoidance, Tax planning, and Asset management.

Irrevocable Trusts
An irrevocable trust cannot be changed or amended by the grantor. Any property placed into the trust may only be distributed by the trustee as provided for in the trust document itself. For instance, the grantor may set up a trust under which he or she will receive income earned on the trust property, but that bars access to the trust principal. This type of irrevocable trust is a popular tool for Medicaid planning.

Testamentary Trusts
As noted above, a testamentary trust is a trust created by a will. Such a trust has no power or effect until the will of the grantor is probated. Although a testamentary trust will not avoid the need for probate and will become a public document as it is a part of the will, it can be useful in accomplishing other estate planning goals. For instance, the testamentary trust can be used to reduce estate taxes on the death of a spouse or to provide for the care of a disabled child.

Supplemental Needs Trusts
The purpose of a supplemental needs trust is to enable the donor to provide for the continuing care of a disabled spouse, child, relative or friend. The beneficiary of a well-drafted supplemental needs trust will have access to the trust assets for purposes other than those provided by public benefits programs. In this way, the beneficiary will not lose eligibility for benefits such as Supplemental Security Income, Medicaid and low-income housing. A supplemental needs trust can be created by the grantor during life or be part of a will.

Credit Shelter Trusts
Credit shelter trusts are a way to take full advantage of state and federal estate tax exemption.