Trusts: A Valuable Estate Planning Tool
A trust is simply a legal entity designed to hold property for the benefit of certain individuals, subject to the terms outlined in the trust document. Contrary to popular belief, trusts aren’t just for wealthy people. Many individuals and families can benefit from trusts as parts of comprehensive estate plans.
At Mignanelli & Associates, Ltd., an estate planning and probate firm, we help people develop the right estate planning tools to support their goals and wishes. Our lawyers offer decades of combined experience navigating all areas of this niche field. We can help you gain peace of mind by preparing for the future with the diligence you deserve.
Revocable Vs. Irrevocable Trusts
There are two major categories of trusts: revocable and irrevocable. They differ as follows:
- A revocable trust is one that you can change or revoke during your lifetime. This gives you more flexibility, but it also comes with limitations, particularly if you’re looking to minimize estate taxes or establish Medicaid eligibility.
- An irrevocable trust can’t be modified or revoked once created. These trusts provide estate tax advantages and can also be used to qualify for Medicaid, provided that they meet numerous requirements.
Common Types Of Trusts
There are many types of trusts, both revocable and irrevocable, and each with its own set of parameters and objectives. Some of the most common include:
- A testamentary trust is established in your will (called a “pour-over will”), which sets out its terms and designates which property will be transferred to the trust during the probate process.
- A term trust allows you to postpone or distribute assets in stages to your heirs, which is useful when a beneficiary is not old or mature enough to handle their own finances.
- A special needs trust provides financial support for a disabled child or spouse without jeopardizing their eligibility for governmental benefits such a Medicaid.
- A living trust allows you to set aside assets for your heirs while still retaining access to those assets during your lifetime.
- An irrevocable life insurance trust (ILIT) can provide significant tax advantages. A life insurance policy is used to fund the trust.
These are just a handful of the numerous types of trusts that may be available to you. Our attorneys can advise you on which trusts are appropriate for your situation.
Professional Trustee Services
Our law firm offers independent trustee services with decades of experience and a complete understanding of trust functionality and trustee responsibilities. We are a more personal, hands-on alternative to having bank trust departments or other parties serve as the trustee.
We can serve as trustee of a trust we have created, or for a trust created by another party. Our team frequently serves as trustee of special needs trusts or other trusts we create. We can also step in as successor trustee if the previous trustee passes away, or we can take over the role in order to resolve a dispute, serving as a neutral third party in the event of conflict between current trustee and trust beneficiaries. In this role, we administer the trust according to instructions, including managing distributions, and we deal with all record keeping, tax matters and more.