Virginia Beach Trusts Attorneys
We Are Here to Help You Plan for the Future
At TrustBuilders Law Group, we understand that you have worked hard to provide for your family and ensure your loved ones will be financially secure after you pass away. However, without a suitable type of trust in your estate plan, your hard-earned assets and properties might end up in the hands of the IRS, creditors, or state taxing authorities. That is why it is crucial to consult with a seasoned lawyer at our law firm to discuss your planning options so we can determine which trust will maximize your estate planning strategy.
What is a Trust?
A trust is a legal arrangement in which one person (the trustee) holds and manages assets (such as real estate, securities, cash, or other property) for the benefit of another person or group of people (the beneficiaries). The person who creates the trust (the grantor) transfers ownership of the assets to the trustee, who is then responsible for managing the assets following the terms of the trust agreement. Trusts can be used for various purposes, such as protecting assets from creditors, avoiding probate, reducing taxes, or providing for family members or other beneficiaries. There are many different types of trusts, including revocable, irrevocable, living, charitable, and special needs. Each type of trust has its unique benefits and drawbacks, and it is essential to consult with an attorney to determine the best kind of trust for your specific situation.
What Are the Benefits of a Trust?
Trusts are versatile tools that have a variety of applications. Some of the benefits of using a trust include:
- Avoiding the probate process for assets in a trust
- Minimizing tax liability to maximize the value you transfer to beneficiaries
- Allowing you to specify conditions on asset distribution or other stipulations
- Shielding your assets from lawsuits or creditors
Learn more about the different types of trusts and the ways it can help protect you, your assets, and your beneficiaries.
Types of Trusts
Revocable Living Trusts
Revocable living trusts are legal documents utterly separate from wills, though they often work hand in hand to carry out the decedent’s wishes. Clients often come to us to set up revocable living trusts to avoid the hassle of probate, particularly if they own real estate in several states.
Irrevocable Life Insurance Trusts
People are often under the assumption that life insurance proceeds are
not subject to Federal Estate Taxes. Although the proceeds loved ones
receive are free of income taxes, they are countable as part of the decedent's
taxable estate. Therefore, the loved ones who receive the life insurance
funds can end up losing as much as half of the policy's value to estate taxes.
However, if you create an Irrevocable Life Insurance Trust (ILIT), you can own your life insurance policy. A properly established and administered trust holds the policy outside of your estate and keeps the proceeds from being taxable to your estate. The proceeds from the insurance policy can then be used to provide your estate with the liquidity to:
- Pay estate taxes
- Pay off debts
- Pay final expenses
- Provide income to a surviving spouse or children
The ILIT will be the policy owner and beneficiary. After you establish the trust, you can use your annual gift tax exclusion to make cash gifts to your trust. With this strategy, beneficiaries forgo the present gift, and the trustee uses the remaining gift to pay the premium on the life insurance policy. ILITs can also be structured to provide income to a surviving spouse, with the remainder going to children from a previous marriage. You can even set up an ILIT to distribute a limited amount of the insurance proceeds over some time if you are worried your child might be financially irresponsible.
Qualified Personal Residence Trusts
A Qualified Personal Residence Trust (QPRT) allows you to give away your house or vacation home at a significant discount, freeze its value for estate tax purposes, and continue to live in it.
With a QPRT, You transfer the title to your house to the trust while reserving the right to live in the house for a specified number of years. After you live in the home for a set amount, it will pass on to your children or other beneficiaries without incurring additional estate or gift taxes.
You can continue living in the home at the end of the specified period. Still, you will have to pay rent to your family or designated beneficiary to avoid including the residence in your estate. The benefit of this trust is that it can reduce the value of your taxable estate, though the rent income does have income tax consequences for your family.
Another benefit of the QPRT is that it also serves as an excellent asset/creditor protection vehicle since you no longer technically own the property once the trust is established. Your residence is transferred to the QPRT.
Trusts for Minors
Clients throughout Virginia Beach turn to our skilled attorneys to devise comprehensive strategies to leave money to their children or grandchildren in a trust. This is typically done to ensure the money will be there for the children’s benefit, such as support, education, medical expenses, etc. Once the children reach a certain age or achievement level (such as obtaining a bachelor’s degree), they can take money out of the trust to do as they please.
Spendthrift trusts are usually created to protect the beneficiaries’ assets from themselves and creditors. Spendthrift beliefs have an independent trustee who has complete control over the distribution of assets held in the trust.
Special Needs Trusts
Do you have a special needs individual in your life? If so, you should contact our legal team to discuss adding a special needs trust so that you can leave property to this individual. If the special individual receives government benefits and suddenly inherits money, they would likely be disqualified from those benefits until the inheritance is spent. Special needs trusts protect those individuals’ government benefits while allowing them to have money for any extras they may need.
Do I Need a Trust If I Have a Will?
While a trust can provide extensive protection, it is still a good idea to include a will as a part of your estate plan.
A will can cover things not included in a trust, such as designating guardians for minor children. Your will can specify someone you trust to raise your children.
Another reason to have a will is to cover any property not under a trust. You may have yet to transfer all property into a trust or may have acquired property shortly before you pass away - a will can cover all your bases to ensure that property is transferred to your rightful beneficiaries.
Call Our Legal Team in Virginia Beach
As you can see, there are many types of trusts, each of which can be customized to serve a valuable purpose in accomplishing your estate planning goals. Our experienced trust lawyers at TrustBuilders Law Group can help you assess your finances and goals to determine the best vehicles to preserve your wealth and legacy.
Contact us today at (757) 500-5135 to request your free case consultation.
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