When someone begins planning their estate, the formation of a trust is one way to both protect assets and make sure distribution interests are kept intact. There are several different types of trusts that can cater to numerous circumstances, and below you will find a guide to exactly what they are.
Revocable Living Trusts
These are trusts that can be changed or revoked by the trustor. When used in conjunction with a will, they also offer flexibility when one wishes to pass down high-value assets to their beneficiaries. They are also not subject to probate, making the asset dispersion process relatively quick.
Irrevocable trusts cannot be modified once they are created. As a result of the trust remaining the same throughout its lifetime, it is granted further protection from creditors and estate taxes, a benefit that revocable trusts do not grant. When these trusts are properly drafted, assets are not owned by the trustor, thus not affecting their personal wealth, income tax, and value of their estate as a whole.
Qualified Personal Residence Trusts
Qualified personal residence trusts (QPTRs) allow trustors to give away your house at a massive discount and even freeze its value while still being able to live in it. They transfer the title of the home to the trust and give trustors a specified number of years to live in it until it is passed on to the chosen beneficiary, all without additional taxes. These trusts also grant unique protection from creditors as the property is no longer considered owned by the trustor.
Special Needs Trusts
These trusts are created to provide funds for beneficiaries with special needs in order to ensure they are taken care of. The advantage of these trusts is that it does not disqualify the special needs individual from government programs and benefits such as Supplemental Security Income and Medicaid.
Charitable trusts allow you to donate to a nonprofit organization while still being able to provide a source of income for yourself and other beneficiaries. The two types of charitable trusts include charitable lead trusts and charitable remainder trusts, both allowing you to qualify for a tax deduction on income, capital gains, and estate taxes.
These trusts allow you to not only designate to whom your assets are distributed, but how they can be accessed as well. Spendthrift trusts are irrevocable and protected from both creditors and beneficiaries themselves. These trusts are also managed by an appointed trustee to ensure all assets held within the trust are used for their intended purposes.
Contact Our Virginia Estate Planning Team Today
When considering taking your first steps in your estate planning journey, the process can seem daunting and intimidated. With over 100 years of combined legal experience, we can help ensure the process is as efficient and cost-effective as possible.
If you would like to draft a trust, but aren’t sure where to start, don’t hesitate to contact us today through our website or give us a call at (757) 500-5135 to schedule your free consultation.