Trusts & Living Trusts
Trusts Attorneys in Fort Wayne
There are many types of trusts. However, most people do not need a Trust. Trusts can be complicated documents and therefore are more expensive than your typical Will. A Living Trust can be beneficial if you have property or real estate in two (2) different states. The Estate Administration and Probate process is different amongst states and if you have real estate in two (2) or more states, an Estate will need to be opened in each state, most likely costing you double estate filing fees and attorney fees along with adding that much more work and responsibility for your designated Personal Representative.
Placing the real estate into a Living Trust can avoid the need to open an estate in the other State and can even avoid the need to open an estate in Indiana. A living trust has other benefits, one of which is privacy. With a Will, an estate is often required to be opened and the Will is filed with the court. It becomes a public record. Others can see the Will. A Living Trust is not filed in court and no one will see it. Celebrities often use Living Trusts to keep their affairs private after they die.
Revocable Living Trusts
Most of you have probably heard the spiel, create a trust to prevent costly and time-consuming Probate. This is partly true, in reality, you are spending more time and money NOW vs AFTER death with a Trust vs a Will. Revocable Trusts are more popular because they can be changed, modified, and even canceled. To create a Trust to avoid probate you have to first create the trust document. Then you have to transfer all your assets into the trust. It is not enough to just declare something is a trust asset, you must take action and change titles, etc. This means taking assets out of your name and putting it into the name of the trust. If you are married, you BOTH would need to transfer your property into the trust. For example, John and Jane Doe would take their jointly owned house and cars out of their names and put it into the John and Jane Doe Living Trust. This could include all vehicles, houses, anything with a title, retirement plans such as 401K and IRAs, bank accounts, and life insurance policies. Once all property and assets are put into the name of the Trust, those assets will not become part of your probate estate and will not need administrated through the Probate process. The trust, if assets are properly transferred, could help avoid probate altogether. However, even with a Revocable Living Trust, we recommend a Will that transfers any assets to the Trust that may not have been transferred during your life to the Trust. In other words, transferring any property you may have inadvertently not transferred during your life. Most people, who create a Trust also create a Will and some Trusts are themselves created within a Will. Typically, after your passing the assets in the trust are disbursed to the heirs in much faster and more economical fashion than through probate, saving time and money.
If you are creating a Trust as a stand-alone estate document (not doing a Testamentary Trust within your Will), you probably intend to use the trust during your lifetime. This can be for many reasons such as the property issue listed above, avoid Probate, protecting assets, and other reasons. To make these trusts work, you must transfer property into those trusts. If the property is NOT transferred (titled, deeded, etc.) in the name of the Trust, it will be part of your Estate and transferred as indicated in your Will or if you have no Will per the laws of the state. Generally speaking you do not avoid taxes with the use of a Living Trust, however, there is no Federal Estate Tax unless the estate is valued over $5.6 million dollars.
A Testamentary Trust in your Will is a Trust that will not be established until you have passed. The assets you designate will go into the newly formed Trust or you can direct your assets to be liquidated and only cash put into the Trust. Parents often elect a testamentary trust for minor children because it places someone (a Trustee) in charge of the child’s inheritance and allows the parents to set an age at which the children would get access to their inheritance. In the meanwhile, the children will have a Trustee who will distribute funds as necessary towards their health, welfare, and education or as specified by you to the Trustee. The majority of families are fine with just a simple Will, but a Testamentary Trust is something that should be considered if there are minor children and the potential assets are sufficient enough to warrant the protection a trust can provide.
Special Needs Trust
A Special Needs Trust or Supplemental Needs Trust can be created within a Will or as an independent document. This type of Trust is designed to help those that have special needs and are on government assistance which limits the disabled person’s assets or income. It allows the person with the disability to still have the benefit of assets in the Trust, but preserve the governmental assistance they receive for their disabilities. This could be very important to ensure your disabled heir continues to receive the governmental benefits they need while also still being able to receive their inheritance. Without a Special Needs Trust, you may negatively affect a loved one’s ability to receive governmental benefits. The receipt of assets can unintentionally disqualify a recipient of governmental benefits.
Miller’s Trust or Qualified Income Trusts are tools used when a person does not qualify for Medicaid because they have too much income but not enough income to pay for nursing home care or other long-term health care. There are income requirements that could disqualify a person from receiving state assistance, like Medicaid. Placing some of your income that is above and beyond the limit you are allowed to receive into a Miller’s trust can keep you qualified for Medicaid. Income placed into the trust is used for health care services.
There are other types of trusts that can be established in your Will or as standalone documents.
Contact a Trusts Attorney Today
Contact a Fort Wayne Trusts attorney at Perry Law Office today at (260) 483-3110 for a free consultation.
What is the difference between an Irrevocable Trust and a Revocable Trust?
A revocable trust can be changed any time before your death, while an irrevocable cannot. Irrevocable Trusts are thought to be “set in stone” and generally cannot be revoked or modified. Therefore, many people are not as interested in creating an irrevocable trust as they are revocable trust. Irrevocable trusts can be a benefit to those looking to avoid estate taxes, and in some situations, liability from creditors.