Trusts: Do I need one?

Revocable Living Trust

A revocable living trust is the most common type of trust utilized by our clients. This document is essentially an enhanced Will that passes outside of the Probate Court. The document outlines how you want your trust assets managed both during your lifetime and after your passing. It designates your beneficiaries and further how your beneficiaries will receive any funds from your trust (whether they will receive the money outright or it will be held in trust for a period of time).

Your trustee will manage the trust. The initial trustee is typically the person who creates the trust and manages it until health or some other factor results in a successor needing to step in. Properly funded, the trust completely avoids the Probate Court.

Credit Shelter Trust

A credit shelter trust (CST) is an estate planning tool utilized for married couples with substantial wealth. This trust is a revocable trust which contains trusts that are created after the death of the first spouse. Upon the death of the first spouse, assets placed in the trust are generally held apart from the estate of the surviving spouse, so they may pass tax–free to the remaining beneficiaries at the death of the surviving spouse.

Retirement Asset Trust

A retirement asset trust (RAT) is a trust that you can establish that can minimize the tax consequences and maximize the value of your retirement assets that pass to your beneficiaries. The RAT can force your beneficiary(ies) to “stretch” the distributions from your retirement assets over their life expectancy, which maximizes the assets’ growth while minimizing the income tax consequences.

Pet Trust

A pet trust is a trust that is established to provide for the care of your pets after your death. You can provide funds and select a guardian to care for your pets after you have passed. You can further lay out a plan for the pets that include where the pets will be cared for and how the guardian should be caring for the pet. You can also lay out specifically what should happen with your furry family members should the guardian you named no longer be able to care for your pet. You can decide who will receive any remaining assets after your pets have passed on.

Discretionary

A discretionary trust is typically established to protect beneficiaries from others, but particularly from themselves. There are a number of reasons this is done: 1) inability to manage funds; 2) substance use and abuse; 3) a tumultuous marriage heading for divorce, and 4) issues with creditors, among other things. The trustee is empowered with the discretion to establish when and how a beneficiary shall receive distributions from their trust.