Trust Attorneys in Rocky Hill, Connecticut
What is a Trust?
Trusts allow people to say how their property will be distributed after they die while maintaining some control over their property while they are alive. Establishing a trust might be straightforward or complicated, depending on your assets and family status.
Trusts are frequently misunderstood. Although a trust is not a document, you will need to prepare one to establish one. A trust is a legal arrangement in which one person controls assets for the benefit.
A trust, like a will, ensures that your assets are dispersed to your loved ones according to your preferences. A trust, unlike a will, can begin working as soon as it is signed and financed, rather than waiting until the individual dies.
What Are the Different Types of Trusts?
Our skilled trust attorneys at Darius Law Group can help you with the following types of trusts:
Living Trust
A living trust is a trust established during one’s lifetime to save money on taxes or build a long-term property management strategy. Living trusts were created to avoid probate, protect financial privacy, and manage assets if the owner died or became disabled.
The particular benefits of a living trust will vary depending on whether the trust is revocable or irrevocable; however, some benefits are common to both. The following are some of the benefits of a living trust:
- Protects Against Incapacity. Incapacity planning can also be done using a revocable living trust. If you become incapacitated, you appoint yourself as the trustee and a successor trustee to control your assets and be transferred.
- Asset Protection. An irrevocable living trust can be used to protect your assets. When assets are transferred to a trust, they are no longer considered part of your estate and are thus protected from creditors and other possible dangers.
- Probate Avoidance. Before your assets can be given to your beneficiaries, they must first go through the probate procedure. Assets maintained under a living trust, on the other hand, avoid the probate procedure entirely and can be dispersed at any moment according to the trust agreement’s stipulations.
- Ability to Protect a Minor’s Inheritance. Your minor children will not get a direct inheritance from your estate. On the other hand, a living trust can keep a child’s inheritance safe until they are mature enough to receive and handle it.
- Special Needs Planning. Giving assets to a loved one with special needs might endanger their eligibility for vital support programs like Medicaid and SSI. An irrevocable living trust allows you to provide for your loved ones without jeopardizing their benefits.
- Control Over Gifts. Whether made during your lifetime or in your Will, Outright gifts become the beneficiary’s property to use as they see appropriate. On the other hand, a living trust permits you to give assets while influencing their utilization.
Revocable Trust
A revocable trust is established throughout one’s lifetime. In many cases, you are the trust’s originator (or grantor) and its trustee. Your assets (such as real estate, bank accounts, investment accounts, and so on) are retitled in the trust’s name
- You Retain Control. As trustee, you now monitor and administer the trust assets once your assets have been retitled in the name of the trust. The trust is “revocable,” which means you can change it or even cancel it throughout your life.
You can also appoint a successor trustee in a revocable trust so that if you become unable to handle your assets, someone you trust can step in and manage them for you.
- Avoid Probate. The trust includes a distribution clause, similar to a Will, that specifies who you want to receive the trust’s assets when you die. The critical difference between a revocable trust and a Will is that the assets in your trust avoid probate after your death.
A Will only affects assets that are solely yours, not those owned jointly.
Irrevocable Trust
A trust founded during your lifetime is likewise an irrevocable trust. You are the irrevocable trust’s grantor, but you cannot act as trustee. It would be best if you appointed other trustworthy people as trustees. But why aren’t you allowed to be the trustee of your trust?
- Preparing for Long Term Care. An “asset protection trust” is also known as an irrevocable trust. It implies you’re moving assets to this trust to avoid probate and to begin safeguarding assets in the event of a future long-term care crisis.
- You Lose Control. The main truth is that an irrevocable trust gives you no control over your possessions. You’re entrusting someone else to act as your trustee and look out for your best interests.
- You Cannot Revoke. An irrevocable trust, as its name implies, cannot be revoked. However, as the trust’s grantor, you maintain some powers, such as the ability to change the trust’s beneficiaries or trustee(s).
For some, forming an irrevocable trust is a significant choice that must be balanced against several other considerations.
Pooled Asset Trusts
A pooled trust is a technique that older folks and individuals with long-term impairments frequently utilize to qualify for public services like Medicaid without completely draining their assets. Pooled trusts are only accessible in a few states and can be somewhat complicated.
Special Needs Trusts
A trust for a disabled kid or adult preserves assets while increasing eligibility for benefits. When a person gets government benefits like Social Security or Medicaid, gifts or inheritances can sometimes limit or eliminate their eligibility.
Choosing whether or not to establish trust is a difficult choice. Selecting the correct type of trust to develop is more difficult if you lack the necessary knowledge. Contact one of our knowledgeable trust attorneys for assistance in making the best decision.
When Should You Have a Trust?
For some people, trust is not required. You probably do not need a trust if you are single, have no children, rent your house or apartment, and do not possess major assets.
A trust is an excellent instrument to employ if you have small children, a kid with special needs, or large assets. The following are some common reasons for having trust:
- Avoiding the probate process
- Protecting assets for children until they are of legal age
- Avoiding or reducing estate taxes
- More flexible than a will
- Managing assets when the settlor is incapacitated
- Preventing finances from becoming public record in probate court
What Are the Different Assets That Do Belong in a Trust?
Aside from retirement funds, almost every other asset can be placed in your revocable trust. Some examples are:
- Your house or other real estates (even if you still have a mortgage)
- Your bank accounts
- Your non-retirement investment accounts that have your stocks, bonds, mutual funds, and the like
- Any other type of ownership interest in a business (such as an LLC)
- Your personal property (such as your jewelry and furniture)
What Are the Different Assets That Don't Belong in a Trust?
Retirement accounts, such as your IRA, Roth IRA, 401K, 403b, 457, and others, do not belong in your revocable trust. Placing any of these assets in your trust entails removing them from your name and renaming them in your trust’s name. The tax consequences can be devastating.
Beneficiaries are nearly always named on retirement funds. After consulting with an estate planning expert, you can call your trust as a beneficiary on retirement funds. If done incorrectly, this can result in a negative tax consequence.
Also, double-check that the custodian, or financial institution where your retirement assets are housed, has beneficiaries identified. Make sure the language of your trust is up to date to reflect your current wants and aspirations.
Why Make a Shared Trust?
Many couples prefer to create a single shared trust because it eliminates the need to split property they jointly own. For example, to keep a jointly owned property in two different trusts, the spouses would have to sign and execute a deed assigning a half interest in the house to each spouse as trustee.
To transfer home goods to separate trusts, couples would have to designate each item to trust or risk giving a half-interest in a couch to two trusts.
If you and your spouse desire to leave major trust property to each other, creating a combined trust has an additional advantage. When one grantor leaves property to the survivor in a shared trust, the property remains in the living trust; no transfer is required when the first grantor dies.
Shared trust is appropriate if you and your spouse or partner own most of your property together, but each of you owns some independent property. You can put everything in the trust, and each spouse can name beneficiaries (including each other) to receive their assets.
Why Make an Individual Trust?
Individual trusts may be necessary if you and your spouse hold most of your property separately. The majority of couples in this position fell into one of the following categories:
- You and your husband signed a contract stipulating that each spouse’s earnings and other income and property would be kept separately
- You’ve only recently married and have little or no joint property.
- You each have mainly separate property you obtained before your marriage (or by gift or inheritance), and you maintain it separately. This is commonly the case for couples who marry later in life and no longer work.
Another reason to create separate trusts is if you each desire sole authority over your trust assets. While both of you are alive, each has jurisdiction over all trust property under a joint trust.
How Can Our Skilled Trust Attorneys Help Achieve Your Goals?
Our trust attorneys can assist you in achieving your objectives. Many clients tell us they had no idea they could accomplish it. Our knowledgeable trust attorneys can show you how trusts may be utilized to achieve a variety of goals, including the following:
- Protecting an individual’s funds
- Assisting beneficiaries in managing their inheritance
- Providing a confidential, smooth transition of asset ownership at death
- Protecting a minor child’s inheritance from court control
- Protecting a child’s inheritance in the event of a parental divorce
- Protecting children in a blended family or from a previous marriage
- Keeping a vacation home, farm, or ranch in the family for generations
- Increasing the value of your beneficiary’s inheritance by reducing taxes
We're Here to Assist You
Many individuals believe that once they have financed a trust, it will immediately take effect when it is needed. A trust must be administered to carry out the desires of its creator. Tax filings with the state and the IRS are part of trust management. The legislation also stipulates that beneficiaries of trusts and others be notified of the decedent’s death.
Opening bank accounts, resolving creditor claims, acquiring a new tax ID number, arranging for the sale of assets, paying the decedent’s final costs, and other responsibilities. Accounting standards must be adhered to.
The responsibilities of a trustee are substantial, and failing to run a trust properly can result in severe financial and legal penalties.
We at Darius Law Group can explain the tasks involved and the potential risks. Our knowledgeable trust attorneys can help you with every step of the process. We can assist you in finding the perfect trustee. Our skilled trust attorneys can also work with your advisers and representatives to ensure that the trust’s directions are followed correctly.