Understanding Your Various Legal Options
A Trust is a legal entity to which you transfer substantially all your assets and formally title them in the name of your Trust instead of your individual name. Your assets are held by you as Trustee and administered for your own benefit, since you are also the Trust Beneficiary.
On your death, your designated successor Trustee steps in your shoes and manages and distributes the assets owned by your Trust to the Beneficiaries which you have designated in the Trust to inherit from you. As such, your Trust — and not your Will — determines who gets what after you are gone.
The Law Offices of Maria N. Jonsson, PC can help you determine the right type of Trust for your family. We are here to answer your questions and help you navigate the Estate Planning process.
Seeking family trust services? Contact us online or call (424) 383-8445 today for a consultation.
What Are the Most Common Types of Family Trusts?
Some of the more popular family Trusts are:
Married Couple Probate-Avoidance Trust
This trust can also be utilized by registered domestic partners. This Trust preserves the federal unlimited marital deduction extended to the surviving spouse.
These Trusts generally also include a springing disclaimer Trust allowing the surviving spouse to — only if feasible — break up the Trust in sub-Trusts at the first death, and create a Credit Shelter Trust, to which generally the surviving spouse is the beneficiary and Trustee.
Irrevocable life insurance Trust
The irrevocable life insurance Trust owns policies of life insurance, thus removing them from the taxable Estate of the insured. This is in important tool utilized to decrease one's taxable estate upon death by excluding the death benefit of the life insurance policy, which is owned by the Irrevocable Trust and is distributed to its beneficiaries.
Qualified Domestic Trust (QDOT)
The qualified domestic Trust is appropriate where one of the spouses is not a U.S. citizen; this Trust essentially mimics the unlimited marital deduction (which is not extended to non-U.S. citizens) and defers the payment of Estate tax until both spouses die.
Second Marriage Trust
A second marriage Trust ensures that the wishes and goals of each spouse are protected at the first death and leaves (with proper drafting) no opportunity to the surviving spouse to:
- Disinherit the children of the deceased spouse
- Or take adverse position to their inheritance interests
- While providing the surviving spouse with adequate support during his or her life
- And also while ensuring a complete step up in cost basis of property passing at both the first and second death
This is not an exclusive list of the type of Trusts available to married couples. The Trust that best fits each set of circumstances will depend on the specific family dynamic, the extent of assets, the inheritance goals sought to be accomplished, and the circumstances of the intended beneficiaries.
Contact Our Firm to Learn More
A Trust is a crucial element of any Estate Plan. If you want to learn more about your legal options or which type of Family Trust is best suited to your needs, we invite you to reach out to the Law Offices of Maria N. Jonsson, PC today for a consultation.
Trying to determine which type of family trust is right for you? Give us a call at (424) 383-8445 or contact us online to schedule a consultation today.