Trusts Aren’t Just for the Wealthy – A Primer on a Powerful Tool to Protect Your Loved Ones
- Posted on: Aug 24 2023
Many people believe that trusts are only for older individuals with a lot of money. However, trusts can be a powerful tool for individuals of varying wealth and backgrounds. Whether you have a lot of money or simply want to provide security for your loved ones, a trust can be extremely helpful. Here’s what to know about trusts and how they can help protect your loved ones.
A trust is a legal document that allows for someone (the “grantor”) to transfer assets to another person or entity (the “trustee”) to be managed and distributed in the manner you desire. Put simply, trusts can help you to control how your assets are handled and can ensure that your wishes are carried out in the way you want – even when you are no longer able to do so yourself.
Revocable vs. Irrevocable Trusts
There are two types of trusts: revocable and irrevocable. Each type of trust has different benefits.
A Revocable Trust, often referred to as a Living Trust, is a flexible estate planning tool that allows you to retain control over the assets you transfer into the trust during your lifetime. You can make changes to the trust’s terms, beneficiaries, or even revoke it entirely if you wish. This type of trust allows assets to avoid probate, which can streamline the distribution of your estate after your passing.
- Avoiding Probate
An Irrevocable Trust, as the name suggests, cannot be altered or revoked without the consent of the beneficiaries and the trustee. Once assets are transferred into this trust, they are considered outside of your estate and no longer under your ownership. Irrevocable Trusts are often used for specific estate planning goals, such as reducing estate taxes or protecting assets from creditors.
- Asset Protection
- Estate Tax Planning
- Medicaid Planning
Trusts can be used in a variety of financial situations in order to meet desired goals. You can set specific conditions for disbursements, ensuring that the funds are used for their intended purpose and safeguarding their long-term well-being. If you have beneficiaries who are minors, individuals with special needs, or those who may struggle with managing finances, a trust can provide crucial protection.
- A Medicaid Trust offers a pathway for your spouse to qualify for Medicaid, enabling them to access necessary funding for their extended care in a nursing home or assisted living facility.
- A Spendthrift Trust provides a way to support a family member’s financial needs while safeguarding them from making unwise purchases. This approach can be particularly beneficial for individuals facing challenges such as addiction or mental health issues.
A Trust can also offer assistance in case of incapacitation. Initially, you can act as the trustee until circumstances change and you’re no longer able or willing to do so. At that point, someone you’ve selected can handle matters according to your specified guidelines within the Trust. Moreover, a Trust can serve as protection against creditors and divorce, preserving your hard-earned assets.
One of the biggest advantages for establishing a trust is that it keeps your affairs private. While a Will becomes public record upon probate, trusts remain private.
Trusts are highly customizable, allowing you to structure them to meet your unique needs. Whether you want to provide for charitable causes, protect assets from creditors, or support a family member’s education, trusts can be tailored to align with your specific intentions.
Regardless of the financial situation in which you find yourself, a trust can help to protect your loved ones and your wishes. While creating a trust can prove complicated, a knowledgeable and experienced California estate planning attorney can help you to navigate the process and create a comprehensive estate plan that meets your unique needs.
The Law Offices of Brian L. Fox, APLC Help those in CA to Establish a Comprehensive Estate Plan
If you wish to establish or update your estate plan, a qualified California estate planning attorney can help. It’s important to make sure that you draft your estate planning documents correctly so as to avoid conflict and confusion later on.
At the Law Offices of Brian L. Fox, APLC, we know how important it is to protect your loved ones and your interests. We will help you to create a comprehensive estate plan for your particular goals. To learn more or to schedule a free consultation, contact us today!
Posted in: Estate Planning