Trusts are a powerful tool to add to your estate plan, as they offer benefits like protecting your assets, reducing tax burdens, and helping your loved ones avoid probate after you’re gone. But with so many types of trusts, each with its own purpose and rules, it’s important to get clear, reliable guidance about how best to utilize them. An experienced trusts attorney in East Lansing can help you weigh your options and choose the ones that best support your long-term goals. Contact Leydorf Law Firm, PLLC for an initial case review and learn how we can help you structure the right trusts to meet your needs and integrate them seamlessly into your overall estate plan.
A trust is a legal structure created by a party called a settlor that allows a third party, called a trustee, to manage assets according to the terms outlined in the settlor’s trust document. The trustee manages the trust’s assets and distributes principal and income from the assets to one or more beneficiaries designated by the settlor. Trusts come in various types based on their structure and governing rules. Each type of trust serves different estate, financial, or tax planning goals. A knowledgeable lawyer in East Lansing can explain the various types of trusts and their advantages and disadvantages, so that you can make an informed decision about which to incorporate into your overall estate plan.
An experienced East Lansing estate planning lawyer from Leydorf Law Firm, PLLC can help you evaluate the suitability of the following types of trusts.
Settlors create revocable trusts during their lifetime for various reasons, such as ensuring the management of their assets in case of incapacity or facilitating the distribution of their inheritances after death without the time and expense of probate. A revocable trust allows the settlor to amend the trust’s terms, change the trustee or beneficiaries, or end the trust and recover the assets at any time during their life. Once the settlor passes away, a revocable trust automatically converts to an irrevocable trust, unless the trust document specifies that the trust should terminate upon the settlor’s death.
An irrevocable trust does not permit the settlor to amend or revoke the trust after executing the trust document and funding the trust. As a result, they relinquish ownership and control over the assets they place in the irrevocable trust, which has a number of financial benefits. These include protecting assets from creditors or waste, reducing the value of one’s estate to meet financial requirements for government benefits, or managing estate tax and other taxes.
A settlor may create a testamentary trust in their will that designates which assets will go into such a trust, which then becomes active upon their death. Testamentary trusts can delay beneficiaries’ receipt of inheritances, including postponing the inheritance until beneficiaries reach a certain age or achieve specific milestones, such as graduating from post-secondary education.
The purchaser of a life insurance policy may establish a life insurance trust to manage the proceeds the policy pays upon their death, including distributing the proceeds from the death benefit to designated beneficiaries. Life insurance trusts can protect loved ones’ inheritances from creditors or other financial issues. They may also help manage estate taxes and avoid distributing the benefits through the probate process.
A spendthrift trust creates protections for inheritances left to loved ones that the settlor believes might otherwise be squandered. A spendthrift trust limits a beneficiary’s ability to access their funds, typically by granting the trustee discretion over when to distribute funds to the beneficiary or how much to distribute. Spendthrift trusts can protect loved ones who have financial issues, personal troubles like addiction, a looming divorce, or just problems managing their money responsibly.
Medicaid trusts help individuals and couples who anticipate needing long-term care in their later years, such as home health services or nursing facility care. The Medicaid program has strict asset thresholds for eligibility that these trusts can help a settlor meet by creating a legal separation between them and their assets. Trusts may also help preserve some assets for other expenses or to pass on to family. However, Medicaid trusts should adhere to the program’s five-year lookback rules. Otherwise, transferring assets to Medicaid trusts could result in penalties that delay the receipt of benefits.
Families may create these trusts for a loved one who has special needs and requires care and support from government services. Special needs trusts can help these individuals by protecting assets, such as inheritances, homes, or injury settlements, or by providing an income stream that allows them to pay for additional goods or services not covered by government benefits, thereby improving their quality of life.
Charitable trusts enable individuals and families to create a philanthropic legacy while also benefiting from tax advantages associated with charitable giving, protecting family wealth, and providing a long-term income stream. Charitable trusts typically come in two forms: charitable remainder and charitable lead trusts. A charitable remainder trust provides an income stream to the donor or other designated beneficiaries for their lifetime or a specified period, with the remaining trust assets donated to chosen philanthropic causes. A charitable lead trust provides donations to designated causes for a set period, with the remaining asset after the term returning to the donor or passing to their family.
An East Lansing trusts lawyer from Leydorf Law Firm, PLLC can help you select and develop a trust tailored to your situation and interests by:
The establishment and maintenance of trusts are not simple tasks. One wrong move could invalidate a trust or have considerable and negative financial consequences. Choose Leydorf Law Firm, PLLC to help you navigate these challenges because:
Are you thinking about incorporating a trust into your or your family’s estate plan in East Lansing, Williamson, DeWitt, or elsewhere in the area? If so, talk to a knowledgeable attorney with Leydorf Law Firm, PLLC about how to do so effectively. Contact us now for a confidential consultation with a trusts attorney in East Lansing, and we’ll walk you through your options in detail.
Nick Leydorf is ready to help you with estate planning and elder law. Let Leydorf Law Firm, PLLC put our experience and diligent legal representation to work for you. Contact us today to learn how Leydorf Law Firm, PLLC can help you.
It’s never too early to get your plans in order. If you’re ready to plan for your future and protect your loved ones, reach out to Nick today to arrange your initial consultation with an estate planning attorney in East Lansing.
