Hammonton Trusts Lawyer
Hammonton Trusts Lawyer
When people think of estate planning, they automatically think of a will. However, a trust is often a good substitute for a will. Other people will use a trust to supplement their will and accomplish estate planning goals that are not possible using a will alone.
At Scott Counsel, P.C., we help clients accomplish their goals using all available estate planning tools. Those with complex assets or an eye toward reducing taxes should consider using a trust to pass some or all of their property to others. Contact our Hammonton trusts lawyer today to learn more.
How to Set Up a Trust
A trust is fairly simple. It is a legal way to hold property. If you own your house, you are both the owner of the asset and its beneficiary, and you also take care of the property. But with a trust, you can split those roles and divide them between multiple people.
The following are necessary to create a trust:
- Settlor or grantor. This is the person who creates the trust.
- Res. This is the property that the trust will own. For example, you can put cash, investment accounts, stocks, real estate, or personal property in the trust.
- Beneficiaries. One or more people will enjoy the use of the property. These are the beneficiaries.
- Trustee. This person manages the trust for the benefit of the beneficiaries. A trustee also owes fiduciary duties to the beneficiaries to protect them, such as a duty of loyalty.
The simplest trust is a living trust. A person can put their assets into a trust and name themselves as the trustee, with a successor trustee to take over when they die. They also name beneficiaries to inherit the asset upon death. This arrangement allows our clients to continue to own property while alive but also have a plan in place for when they die.
A great benefit of a living trust is control. If you want to take assets out of the trust, you can do so without anyone’s permission. This control makes the trust “revocable,” meaning you can change or revoke it. However, because the trust is revocable, you still technically own the assets—which can matter for purposes of taxation and governmental benefits.
Other Popular Trusts
Our clients often request more complex trusts to reduce their tax burden or accomplish other goals:
- Charitable lead trust. Our client creates a trust to give money or assets to charities for a set term. After the term expires, the trust assets usually go to family members.
- Charitable remainder trust. With this trust, a charity receives what’s left after a term ends. So you might provide income to children for 20 years, and then have your favorite charity receive what remains.
- Life insurance trust. We can remove life insurance from your estate by putting it in a life insurance trust. Your life insurance beneficiary might not have to pay taxes.
- Special needs trust. Many government programs are means-tested, and loved ones might be disqualified if you leave them assets. By putting assets into a special needs trust, your loved one can continue to draw government benefits while receiving supplemental income from the trust.
- Qualified Income Trust. Medicaid is a means-tested program, but someone with high income can still qualify if they create a qualified income trust tied to a bank account. Our clients can deposit checks into the account (such as their Social Security payment), and income will be disregarded for purposes of qualifying for Medicaid.
These are only some of the more popular trusts. Others might be more appropriate, depending on your objectives.
Why Our Clients Use Trusts
Trusts provide many advantages over wills or other methods of owning assets.
One value is privacy. Although a will must pass through probate court, a trust does not. This means the contents of the trust will not be disclosed to the public. People who want to provide for children born outside wedlock or who have assets they want to keep private often choose a trust to accomplish those purposes privately. You might also choose a trust simply because you don’t want neighbors or reporters prying into your financial affairs.
Trusts might also provide immediate income to your loved ones once you die. Because a trust does not pass through probate, the trustee can distribute assets faster.
Another reason to create a trust is to qualify for government benefits or reduce the tax burden. Because the trust owns the assets, you are not the owner in the government’s eyes. However, you typically need to create an irrevocable trust to accomplish these goals. With an irrevocable trust, you cannot change your mind and make changes while living.
It’s important to realize that disappointed heirs can still legally challenge a trust like they can challenge a will. A trust created by duress, coercion, or fraud will be invalid—and loved ones can claim you lacked capacity when you created your trust.
Issues Involving Trust Administration
In addition to drafting trusts, Scott Counsel can help with trust administration disputes. As mentioned above, a trustee owes certain duties to beneficiaries, and beneficiaries might need to sue if they believe the trustee has violated any of them.
Most clearly, a trustee must follow the terms stated in the trust. For example, a trust might state how the trustee is to invest trust property or when to make distributions to beneficiaries. A trustee cannot ignore these provisions and do whatever they want.
Trustees also owe beneficiaries duties of loyalty, due care, and impartiality. For example, a trust might give a trustee discretion in how they invest property. But because of the duty of care, they must make prudent investment decisions. A trustee who uses all assets to fund a new restaurant, for example, has not been prudent and could be sued by beneficiaries.
Speak with a Hammonton Trusts Lawyer
We will gladly discuss whether a trust is right for you and draft one so you can have peace of mind. Contact us today to schedule a consultation by calling (856) 485-4585.
– When my son, who has Cystic Fibrosis and CF related diabetes, was suddenly and unexpectedly removed from his Medicaid program, we were devastated and frightened not knowing where we would get the resources to pay for his extremely high priced prescriptions. Justin was the attorney who handled our case. From the very beginning, he proved to be very thorough and experienced with navigating the process of reversing the Medicaid decision. However, it was his apparent kind, caring nature that made us feel the most at ease. Justin was successful in securing a continuation of benefits for my son, and we are extremely grateful for having his expertise during this most stressful ongoing process. Thank you, Justin!
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