Trusts are governed by law and serve to protect assets while guiding their use and disposal in accordance with the intentions of their owners. While trusts can be used both during a person’s life and after their creators pass away, wills only take effect when the creators pass away. Wills and trusts can serve as efficient estate planning tools, either individually or together.<\/span><\/p>\n

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WILLS<\/b><\/h3>\n

A will is a legal document that specifies who will receive your assets after your death, including your chosen beneficiaries and heirs. It may also contain your instructions for decisions that must be made regarding matters that arise after your passing, such as the designation of a will’s executor and guardians for minor children, as well as instructions for your funeral and interment.\u00a0<\/span><\/p>\n

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A will may instruct the executor to establish a trust and name a trustee to manage assets for the benefit of a specific person, such as minor children until they reach adulthood or a certain age.<\/span><\/p>\n

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According to state law, a will needs to be signed and witnessed. A legal procedure is required for its implementation. It must be carried out by your appointed executor and submitted to the probate court in your area. The agreement is openly accessible in the probate court’s records, which also have jurisdiction over any legal disputes and which oversee its execution.<\/span><\/p>\n

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TRUSTS<\/b><\/h3>\n

The transfer of assets from their owner, referred to as the grantor or trustor, to a trustee is made possible by the legal arrangements known as trusts. They specify how the assets will be managed by the trustee, who will distribute money to one or more chosen beneficiaries, and how the assets will be disposed of in the end. As a fiduciary, the trustee has a duty to manage the assets of the trust in a way that serves the beneficiaries’ interests alone and in accordance with the terms of the trust agreement.<\/span><\/p>\n

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Trusts take effect when assets are transferred to them, not when a person dies as is the case with wills. A “living trust” can be established while the grantor is still alive. Or a trust could be a “testamentary trust,” established following a grantor’s passing in accordance with instructions in their will. Trusts are frequently used in estate planning to benefit the grantor’s heirs and make provisions for the distribution of assets to them.<\/span><\/p>\n

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Revocable Trust<\/b><\/h4>\n

Additionally, trusts can be established for a range of goals both before and after the grantor’s passing. Grantors may establish revocable trusts during their lifetimes, which they may change, amend, or terminate at any time. A revocable trust’s trustee may be the trust’s grantor. For tax purposes, the grantor still legally owns the trust’s assets.<\/span><\/p>\n

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When a grantor-trustee passes away or becomes disabled, the trust agreement may name a successor trustee and include instructions for the management and distribution of the trust’s assets going forward. A revocable trust avoids probate by transferring assets. The assets, however, are a part of the grantor’s taxable estate because the grantor maintains control over the trust while still alive.<\/span><\/p>\n

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Irrevocable Trust<\/b><\/h4>\n

On the other hand, when grantors transfer assets to an irrevocable trust\u2014one that they do not control and cannot change\u2014they forfeit their ownership rights to those assets. A trustee who is not the grantor is responsible for overseeing irrevocable trusts. The income from the trust assets is not included in the grantor’s taxable income and the assets are not included in the grantor’s estate as long as the grantor has relinquished all control and beneficial interest in the trust assets. Assets transferred from the grantor to the irrevocable trust may be shielded from the grantor’s creditors if the transaction is properly structured.<\/span><\/p>\n

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Special Purpose Trusts<\/b><\/h4>\n

Estate plans frequently include provisions to support charitable causes or address unique family circumstances in addition to providing for your heirs. Rules for establishing trusts for particular purposes are established by federal and state laws. The two types of trusts that are typically created during the grantors’ lifetimes are charitable trusts and “special needs trusts.”<\/span><\/p>\n

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Charitable Trusts<\/b><\/h4>\n

Certain irrevocable trusts that benefit charities while giving their grantor or beneficiaries some financial return are given special tax benefits. These two objectives may be accomplished by charitable lead trusts and charitable remainder trusts that satisfy the technical requirements of the tax code. Complex tax law regulations must be followed during the establishment, administration, and dissolution of these trusts.<\/span><\/p>\n

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Trusts for charitable purposes may be established for a specific number of years or for the lifetime of one or more people. In order to support recurrent donations to charities, the grantor transfers assets to the trust. The remaining assets are given to the non-charitable beneficiaries, such as the grantor’s family, when the term of the charitable lead trust expires. These trusts may be established through a will or during the grantor’s lifetime. Depending on the trust’s design, the grantor may be eligible for a partial tax deduction at the time of creation, benefits from estate and gift taxes, or even taxable income in some circumstances.<\/span><\/p>\n

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A charitable remainder trust is an irrevocable trust that offers ongoing income to the grantor or other named non-charitable beneficiaries as well as a partial tax credit depending on the value of the contributed assets. When the period of the trust\u2014which may be a duration of no more than 20 years or a term depending on the lives of one or more non-charitable beneficiaries\u2014expires, the donated assets are dispersed to one or more charities.<\/span><\/p>\n

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Special Needs Trusts<\/b><\/h4>\n

“Special needs trusts” can be established by people who are worried about the financial requirements of people with disabilities (i.e., “special needs” that impede or limit their capacity to give their economic assistance). With the help of special needs trusts, these people can access money from the trust for certain reasons without risking losing their eligibility for federal and state public assistance programs like Supplemental Security Income (SSI) and other benefits.<\/span><\/p>\n

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Legal professionals should be contacted to verify that the creation and administration of these trusts won’t prevent the beneficiary from receiving public assistance since they must adhere to rigorous restrictions established by federal and state regulations.<\/span><\/p>\n

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Trusts are governed by law and serve to protect assets while guiding their use and disposal in accordance with the intentions of their owners. While trusts can be used both during a person’s life and after their creators pass away, wills only take effect when the creators pass away. Wills and trusts can serve as […]<\/p>\n","protected":false},"author":7,"featured_media":3505,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[1],"tags":[32,33],"class_list":["post-3501","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog-home","tag-the-difference-between-a-will-and-a-trust","tag-wills-and-trusts"],"_links":{"self":[{"href":"https:\/\/bryantelderlaw.com\/wp-json\/wp\/v2\/posts\/3501","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bryantelderlaw.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bryantelderlaw.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bryantelderlaw.com\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/bryantelderlaw.com\/wp-json\/wp\/v2\/comments?post=3501"}],"version-history":[{"count":4,"href":"https:\/\/bryantelderlaw.com\/wp-json\/wp\/v2\/posts\/3501\/revisions"}],"predecessor-version":[{"id":3506,"href":"https:\/\/bryantelderlaw.com\/wp-json\/wp\/v2\/posts\/3501\/revisions\/3506"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bryantelderlaw.com\/wp-json\/wp\/v2\/media\/3505"}],"wp:attachment":[{"href":"https:\/\/bryantelderlaw.com\/wp-json\/wp\/v2\/media?parent=3501"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bryantelderlaw.com\/wp-json\/wp\/v2\/categories?post=3501"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bryantelderlaw.com\/wp-json\/wp\/v2\/tags?post=3501"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}