Moorestown Trusts Lawyer
Moorestown Trusts Lawyer
Trusts are a helpful estate planning tool that few people have heard of. As with wills, a person can leave their property to family members or other people using a trust. At the same time, they can reap taxes and other advantages.
Creating a solid estate plan requires careful consideration of your goals and the best ways to achieve them. Many of our clients appreciate the private and tax savings afforded by a trust, so we always consider whether they will be helpful in an estate plan. Contact Scott Counsel, P.C. to learn more from a Moorestown trusts lawyer.
What Are Trusts?
Put simply, a trust is a legal way to own property. It involves a settlor or grantor drawing up a trust document that identifies someone to manage the property owned by the trust (trustee) and a person who will benefit from the trust (beneficiary). The settlor then transfers ownership of assets to the trust.
A trust can contain detailed information on how to manage the property and make distributions to beneficiaries. In this way, many people use a trust the same way they would a will: they identify who should inherit their property after they die.
Trusts can be created while the settlor is living (called an inter vivos trust). Or they can be created by having a will transfer assets into the trust at death (called a testamentary trust). If a trust is created while living, the settlor can create a “revocable trust,” meaning he or she can revoke it at some point and take back ownership of trust assets. Or the trust could be “irrevocable” and incapable of being changed.
What are the Benefits of Creating a Trust?
Our clients use trusts to accomplish certain estate planning goals:
- Privacy. Trusts are not probated after death, so clients can use them to hide what assets they own. If you are a public figure or have prying relatives, a trust can protect your privacy.
- Qualifying for government benefits. Some government programs are means-tested, and you will be disqualified if your income is too high or you have too many assets. Medicaid is an example of a means-tested program many senior citizens rely on. Fortunately, you can still qualify for benefits if you deposit income or transfer assets to a trust.
- Efficiency. Because a trust is not probated after your death, assets can be distributed more quickly to your beneficiaries.
- Control. If you leave assets to a loved one in a will, they will get unrestricted use of that asset. Sometimes, our clients want to control how a loved one uses an asset. This is possible with trust.
- Tax advantages. Our clients can often reduce their tax burden by shifting assets into a trust. A charitable trust, for example, can provide income for life with the remainder passing to a charity upon your death.
Won’t You Lose Control?
It depends on the type of trust you create. The most common trust is a “living trust.” This is a revocable trust that a person creates while alive. Because it is revocable, settlers can always change their mind and clawback whatever assets they put in the trust. Many people like the control they receive with a living trust and most often use it as a will substitute.
However, a living trust cannot accomplish everything. Because it is revocable, there are no tax advantages because the IRS considers you the true owner of the assets. And the IRS is right—if you can undo a trust, then you still retain power over them.
Irrevocable trusts cannot be undone. But it is still possible to retain control over the assets in the trust by the instructions you include for the trustee. For example, you might put a vacation home in a trust while limiting who can stay at the home and on what dates.
Choosing the Right Trustee
A trustee manages a trust according to the trust document. As you can imagine, this person has quite a bit of control. Some trusts will give the trustee discretion over how to invest assets, such as cash or stocks. If the trustee makes poor choices, the trust could run out of money and the beneficiary could end up penniless. Even where the trust limits discretion, a careless or greedy trustee could steal assets or sell them to friends and family at a discount.
At Scott Counsel, our Moorestown trusts lawyer will discuss who would make a good trustee. In some cases, the settler names himself as trustee—but that isn’t always the best choice. Sometimes, a professional trust company is a better option because they have professional knowledge of how to manage assets.
Trust Administration: Legal Conflicts
Our Moorestown trusts lawyers can also help with any legal issues involving trust administration. For example:
- We can advise trustees on their legal obligations, such as their duties of loyalty and prudence. A trustee might not know whether to make certain investments, and we can discuss the legal considerations.
- We can represent beneficiaries in a lawsuit. If you believe the trustee has injured you negligently or by stealing, we can sue in court for compensation.
- We can defend trustees in court. A trustee could face personal liability for violating fiduciary duties.
- We can help with trust reformation or modification. Some trusts need to be modified, otherwise, they will not fulfill the settlor’s purpose. However, the settlor might long have died, or the trust is irrevocable, so changing the trust is difficult.
Trust administration conflicts threaten to bankrupt even a generously funded trust. Litigation can drag on for years, and no one ends up getting ahead. For this reason, heading off litigation by receiving expert legal advice is essential.
Our Moorestown Trusts Lawyers Are Standing By
When used properly, trusts are a terrific part of a comprehensive estate plan. This is a large area of law, and we encourage anyone considering a trust to meet with an attorney instead of trying to draft their own using an online template. Scott Counsel offers consultations to those who call our firm at (856) 281-3131.
– 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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