HOW A TRUST FITS IN YOUR ESTATE PLAN

TRUSTS HAVE CHANGED

Historically, trusts were a legal tool used most often by wealthy families

as a way to pass down the family wealth from

one generation to the next

Trusts have evolved over the last century and, consequently, have become a common addition

to the average estate plan

WHAT IS A TRUST

A TRUST IS A LEGAL ARRANGEMENT

in which one or more persons hold property subject to certain duties to

use and protect it for the benefit of others

ELEMENTS OF A TRUST

1 Grantor –person who creates and funds the trust

2 Trustee – person or entity that oversees the administration of the trust and manages trust assets

3Beneficiary –person, entity, or even pet that benefits from the trust

4Terms –created by the grantor that dictate how the assets are to be managed and distributed to beneficiaries

5Assets – used to fund the trust. Can be cash, real property, securities – basically anything of value

Testamentary vs. Living

Testamentary trust takes effect upon the death of the grantor

A testamentary trust is often used to guard assets for minor children upon death of parent

Living trust (inter vivos) becomes effective when all requirements for creation are met and assets transferred in to fund the trust

Irrevocable vs. Revocable

REVOCABLE TRUST allows grantor to modify, change,

even terminate trust at will

IRREVOCABLE TRUST does not allow grantor to

make any changes once created

Testamentary trust is always irrevocable because grantor is no

longer around when trust becomes effective

TAX AVOIDANCE AND TRUSTS

Tax avoidance is a common reason to use a trust in an estate plan

Assets transferred to an irrevocable living trust are no longer owned by

the grantor, meaning they are not subject to gift and estate taxes at the time of the

grantor’s death

TRUSTS AND PROBATE AVOIDANCE

The larger the estate the longer it takes to probate as a general rule

TRUSTS AND INCAPACITY PLANNING

A comprehensive estate plan should include an incapacity plan

A trust can be a valuable incapacity planning tool

Create a revocable trust

Name yourself as trustee and a spouse/adult child/parent as successor trustee

Transfer assets into the trust

Upon your incapacity the successor trustee automatically takes over control of trust assets without the need for court intervention

SPECIAL NEEDS PLANNING

A trust can be a valuable special needs planning tool

Can’t gift assets directly to special needs individual because he or she

could lose eligibility for federal benefit programs

A special needs trust (supplemental needs trust)

created for this SITUATION

It is recognized by federal government if drafted properly

A special needs trust allows you provide financial support to special

needs individual without losing eligibility to assistance programs

CHARITABLE TRUSTS

Charitable lead trust provides for charity first and then remainder

to non-charitable beneficiary

Charitable remainder trust provides

for non-charitable beneficiary first with remainder to charity

Tax advantages to this

TYPE OF TRUST

GET IN TOUCH TO SCHEDULE A FREE ESTATE PLANNING

CONSULTATION

If you live in the NY metropolitan area, we invite you to contact the Law Offices of Barton P. Levine

to set up a free consultation

www.bartonlevine.com(888) 268-4425

Law Offices of Barton P. Levine