A trust is a fiduciary arrangement in which a trustee holds assets on behalf of a beneficiary or beneficiaries. Trusts can specify how and when assets should be passed to beneficiaries. When a person has a trust, they may be able to avoid the probate process when the time comes to distribute assets. This can save a family time, money, court fees. In some cases, it can even potentially reduce estate taxes. If you are considering creating a trust, it is important to consult with an experienced estate planning attorney. The estate team at Friedman Schuman has over 30 years of experience guiding clients through matters related to trusts. If you need quality legal assistance, contact our firm today.
What are some benefits of creating a trust?
Trusts can be beneficial for many different reasons. First, a trust allows a person to control his or her wealth. A trust is able to specify the terms of the trust according to the wishes of the estate. They can also control who can receive distributions from the trust, and when those distributions may be made. Trusts can also help a person protect his or her legacy. A trust that is properly constructed can assist a donor in ensuring that the estate is not accessible to just anyone, for example, a prospective beneficiary who is inept to the management of money or assets. The privacy associated with a trust is also an attractive benefit. Donors can enjoy knowing that their financial affairs are not on public record and not subject to the costly fees associated with the probate process.
What are the different kinds of trusts?
Trusts fall into two different categories. First, there is an inter vivos trust. An inter vivos trust is a trust that, when created, is fully operational. This type of trust is typically funded throughout the donor’s lifetime. The second category of trust is a testamentary trust. This category of trust is usually established after the donor’s death and typically in accordance with the decedent’s will. There is a variety of trusts that can be compatible with any person seeking to create a trust. However, the two most common types of trusts are:
- Irrevocable trusts: An irrevocable trust is a trust that is created during the life of a donor, and cannot be changed or amended. Any assets in the trust can only be distributed by the trustee as indicated by the terms of the trust instrument. Irrevocable trusts are commonly used for federal estate tax planning and/or Medicaid planning.
- Revocable trusts: Commonly referred to as inter vivos or living trust, a revocable trust is created during a donor’s lifetime which can be amended or revoked at the donor’s discretion. A revocable trust can be an attractive option to a donor because he or she can reap the benefits of the trust arrangement while still maintaining control over the assets in the trust.
Furthermore, there are numerous trusts within these categories that each come with a specific purpose. Some of the many examples of trusts include bypass trusts, charitable trusts, charitable lead trusts, charitable remainder trusts, credit shelter trusts, grantor trusts, marital trusts, special needs trusts, just to name a few.
Contact an experienced trusts attorney in Montgomery County
Deciding which trust is best for you is a personal decision. It can also be highly dependent on your financial situation. Regardless of how many assets you may have, consulting with an attorney about the financial future of you and your loved ones can help ease your mind. Friedman Schuman provides legal services to clients in Pennsylvania for all their estate planning and administration needs. If you require an experienced legal team to guide you through creating a trust, contact Friedman Schuman to schedule a consultation.