A Trust agreement is an agreement between an asset holder and Trustee, to manage and distribute those assets, for the benefit of a beneficiary or beneficiaries. Trusts can be a powerful tool in estate planning as they provide a great deal of supervision and flexibility over direct distribution of assets.
A Revocable Trust is often referred to as a “Living Trust” and is drafted during a person’s lifetime to determine the disbursement of assets in the event of that person’s death or mental incompetence. This type of trust can be modified and updated at any time during the grantor’s lifetime and specifically defines distribution at death.
In contrast, an Irrevocable Trust cannot be amended once signed and therefore should only used in cases involving permanent transfers of assets. Due to its irrevocability, great care must be taken in structuring the Trust.
Family or Bypass Trusts provide a great opportunity for protecting assets passed to love ones free of estate taxes. To achieve this, the Trust created by the deceased is divided into two sub-Trusts, a Marital Trust for the sole benefit of a surviving spouse, and a Family Trust, which can benefit a spouse, children or other beneficiaries. The Family Trust is not included in the surviving spouse’s estate for tax purposes.
Variations and benefits of Trusts are limitless. At Keene & Sparks, LLP, we are well versed in the process of evaluating your assets and advising you on the best Trust options available to accomplish your goals and objectives.
Contact us to learn more about Trusts.