Trusts
What is an Asset Protection Trust?
A trust is a fiduciary arrangement where the giver, or grantor, provides directions to a “trustee” who holds and manages assets on behalf of your beneficiary or beneficiaries.
A trust allows you to give instructions about how your assets should be managed and to whom they should be given, and to pick a reliable trustee to make sure your wishes are carried out long after your death.
Trusts are very flexible, and can be drafted in a variety of ways. Different types of trusts may convey the following benefits:
- A trust may save your family money by shielding assets from probate, an expensive, court-monitored process which divides up the estate after death.
- A trust may provide for children or grandchildren until they are mature enough to handle their own affairs.
- A trust may prevent family assets like farms or businesses from being unnecessarily divided or sold.
- A trust may make sure that benefits go to the right people, at the right times, for the right purposes, and in the right amounts.
Revocable Living Trusts
A revocable living trust is a popular type of trust designed to avoid the expenses of probate or to shield valuable personal property from public view. The revocable living trust allows you to serve as your own trustee during your lifetime, which allows you to keep taking care of your own assets.
The revocable living trust can help assets pass outside of probate, yet allows you to retain control of your assets during your lifetime. It is flexible and can be dissolved at any time, should your circumstances or intentions change.
Because probate is a public process where the assets of the estate are publicly disclosed, many clients prefer to place certain valuable personal property such as guns, jewelry, coins, or collections in trust so that it will pass to heirs privately and confidentially instead of in open probate court, where these valuables could be later targeted by thieves.
For more details about revocable living trusts, please click on the following links:
- HOW A REVOCABLE TRUST KEEPS YOUR ASSETS OUT OF PROBATE (video)
- HOW A REVOCABLE TRUST WORKS TO KEEP YOUR ASSETS OUT OF PROBATE (article)
- THE REVOCABLE LIVING TRUST: A BETTER WAY TO MANAGE AN AGING SENIOR’S ASSETS (article)
- SEPARATE TRUSTS OFFER NC COUPLES MORE FLEXABILITY (article)
Asset Protection Trusts / Irrevocable Trusts
An irrevocable trust is a trust, where assets are normally transferred during life or after death, with terms and provisions that cannot be changed by the grantor. Legally, a grantor who conveys asets to an irrevocable trust and retains no interest or other rights in the trust makes a “gift” to the trust. As long as the gift to the trust is made in advance and is not made to escape existing or known creditors of the grantor, the transfer to the trust is legally similar to the grantor making a direct gift to the trust beneficiaries. Once the grantor properly transfers assets into the irrevocable trust, those assets are normally not accessible to any potential future creditors of the grantor. Irrevocable trusts may also be set up to protect assets from a beneficiary’s creditors as well, and may be used to benefit persons with known creditor problems.
Medicaid Asset Protection Trusts (MAPTs) may be useful in advance Medicaid planning, and may help a grantor protect assets from future Medicaid estate recovery, and can reduce the grantor’s countable Medicaid estate (while benefitting loved ones) in order to help the grantor qualify for Medicaid assistance with long term care costs.
For more details about asset protection trusts or irrevocable trusts, please click on the following links:
- PROTECTING YOUR ASSETS WITH A STEP APT ASSET PROTECTION TRUST (video)
- PROTECTING YOUR ASSETS WITH A STEP APT ASSET PROTECTION TRUST (article)
- USING A MAPT TO PROTECT A HOME WITH A MORTGAGE FROM MEDICAID ESTATE RECOVERY (article)
- HOW TO WILL ASSETS TO A FINANCIALLY RISKY HEIR / DISCRETIONARY TRUSTS (article)
Family Trusts
A family trust is designed to pass assets to children but may also be used to care for a surviving spouse. Family trusts may be used to assure that money is available to your children for important reasons, such as for the beneficiaries’ education. The family trust is designed to make sure that the bulk of your funds are not given to beneficiary children at too early an age (before the children are responsible).
With this trust, a reliable adult trustee whom you select in advance will disburse trust funds to children as needed, with the body of the trust assets not distributed to the children until they reach an age you select in advance (can be any age you select, such as 21, 25, 30, or 35). The family trust often provides the trustee with significant flexibility in taking care of children–trust assets are distributed into a “common pot”, and the trustee may make distributions to the children who require the funds at the time when funds are actually needed.
For more information, please click on the following links:
HOW A WILL AND FAMILY TRUST PROTECTS YOUR YOUNG FAMILY (video)
PROTECTING YOUR FAMILY WITH A FAMILY TRUST (article)
Marital Trusts
A marital trust is set up to benefit your spouse. Assets may be transferred during life or at death. When the trust is formed, you may choose who receives any remaining assets in the trust after your spouse dies.
If the estate is large enough, a marital trust takes advantage of the marital deduction for federal estate tax. With a marital trust, you may transfer, during life or at death, an unlimited amount of property to your spouse without incurring gift or estate taxes. A marital trust saves estate tax costs in only larger estates, because federal estate taxes do not even come into play until the estate’s gross assets plus taxable gifts reach $5.45 million (2016 figure). The NC State Estate Tax was abolished in 2013.
Special Needs Trusts
The special needs trust can be set up for a handicapped child in order to allow you to ensure proper management of trust assets for the benefit of the child, supervision of the beneficiary (the handicapped child), and distribution of funds that will provide for the handicapped child’s future, while at the same time preserving the governmental benefits to which the child is entitled.
For more information about special needs trusts, please click on the following link:
HOW A SPECIAL NEEDS TRUST WORKS TO PROTECT SENIORS AND SPECIAL NEEDS BENEFICIARIES
GunWise RLT℠ Revocable Living Trust
The GunWise RLT Revocable Living Trust is for the regular firearms owner who also wants to keep all of his family assets kept private, and out of probate. It contains specialized language to inform the trustee of the trust how to legally and properly transfer trust firearms to beneficiaries after the trust grantor passes away.
For more information on using our GunWise RLT℠ Revocable Living Trusts in North Carolina to protect your firearms collection, please click on the following article and fact sheet: