Virginia Tax Planning Lawyers
If you have asset protection concerns, children or wish to consider tax planning then a Trust might be the perfect tool. Trusts are flexible tools that can solve many problems
What is a Trust?.
A Trust is an arrangement where a Grantor gives power to a Trustee to hold assets for the Beneficiary. The Grantor “grants” the powers to someone they “trust” to “benefit” the Beneficiary.
Are Trust Terms Open to the Public?
Wills once filed at your death, are public record. Anyone can go to the Register of Wills or Surrogates office and read your Will. Trusts, though, can remain private.
What is the Difference Between a Revocable and Irrevocable Trust?
A Revocable Trust is “revocable.” You can grant the trustee the power to hold assets but at any time you can “revoke” that power and take the asset back. An Irrevocable Trust cannot be revoked. Revocable Trusts are useful tools to avoid probate, maintain privacy and provide help should you become incapacitated. But, they do nothing to shelter assets from creditors. To learn more, see my articles about The Pros and Cons of Revocable Trusts.
What are Some Types of Irrevocable Trusts?
Well drafted and managed Irrevocable Trusts are excellent asset protection tools. They come in many varieties to serve different situations.
- What is a SLAT Irrevocable Trust? SLATs are Spousal Limited Access Trusts. Commonly used by married couples to shelter assets from future creditors and provide Estate Tax and Inheritance Tax avoidance.
- What is an ILIT Irrevocable Trust? ILITs are Irrevocable Life Insurance Trusts. These trusts are crafted to hold life insurance policies so the proceeds pass free from Estate Tax, Gift Tax, and Inheritance Tax. Further, an ILIT can help make sure your life insurance is held safely for your spouse sheltered from her future husbands and creditors.
- What is a Disclaimer Trust? A Disclaimer Trust is typically placed in your Will. This ingenious planning tool allows your spouse to decide at your death to place assets in his name or to shelter them in a protective Irrevocable Trust.
- What is a Dynasty Trust? Often used for children, a Dynasty Trust describes Irrevocable Trusts designed to continue from generation to generation providing shelter to all beneficiaries from creditors, divorce, and bankruptcy.
- What is an Education Trust? Education Trusts can be part of a Will or they can be created during your lifetime. Terms can vary, but typically these trusts hold assets that can only be used to pay for the future education of your descendants. The Education Trust holds these assets providing shelter from your descendants’ marital problems, tax issues, and divorces.
There are many other types of Irrevocable Trusts, see my Article on Irrevocable Trusts for more information.
In conclusion, this post is a short introduction to a critical and complex issue. Contact an attorney, like an experienced Philadelphia Estate Planning Lawyer, in your area to find out what plan best fits your needs.
Thanks to our friends and contributors from Klenk Law for their insight into trusts and estate planning.