Trusts & Wills
“Living” or “revocable” trusts are powerful planning tools. When set up by a knowledgeable attorney, they can help you
- spare your heirs the cost, delay and public nature of the probate court procedure
- protect assets from your heirs’ and beneficiaries’ creditors, including divorcing spouses
- control the use and disposition of your assets after your death if outright distribution is inappropriate (for example, if a beneficiary has special needs, mental health problems, addictions, or is simply not sufficiently mature to handle a substantial inheritance)
- avoid taxes
Further, trusts are more robust, private, and self-controlled tools for managing assets than powers of attorney in the event of incapacity, since the latter may have limitations imposed by state law, and they can be very useful in planned charitable giving, whether in your lifetime or after your death.
Irrevocable trusts are also powerful tools, but need to be used with particular care. They can shelter assets that would be inappropriate to give away today, but which you want to remove from your estate so that they cannot be reached by creditors, including the State.
The chief benefit of using a qualified professional to plan for the protection and eventual distribution of your estate is that the professional’s knowledge is applied to your particular life, family and asset circumstances. Do we need a trust? How should it be structured? What assets should be placed in it, and which left out? Do we leave our IRA/401(k) to the trust or not? What are the relationship, creditor protection, and tax consequences of all these choices? Estate preservation planning is a very complex area of law, at the intersection of state court probate and intestacy rules; bankruptcy, divorce, and creditor recovery systems; federal and state income, estate, and capital gains tax laws; and public benefit regimes such as Medicaid, Social Security and disability. Professionals in this arena spend a great deal of time becoming trained and keeping abreast of the constant changes in the law. Do not try this at home!