A well-crafted estate plan can allow you to care for your loved ones even after death. And no, you don’t have to be a Zuckerberg or Gates to benefit from a trust. A trust lets you give you better control over how your heirs will receive their inheritance, all while protecting it from probate court. Schedule a consultation with our St George trust lawyer at Boyack Christiansen Legal Solutions by calling 435-375-3960 to discuss your estate plan further.
The Benefits of a Trust
The main benefit of a trust is that it avoids probate. During this process, the probate court checks the legitimacy of your will and determines how to distribute your assets. This alone provides many advantages:
- Keep your Privacy
Probate is a matter of public record. If your estate goes through probate, anyone can just go up to the court clerk and ask for the records. In fact, people can even go through the Utah probate records online with a simple click of a keyboard! Keep your family affairs private by avoiding probate!
- Transfer Property According to your Wishes
There is a chance that probate court could award your assets to someone you did not intend. A trust lets you give specific instructions as to who your beneficiaries are as well as when and how they’ll receive their inheritance. Avoid probate to ensure that your hard-earned assets go to your loved ones!
- Make it Easy for Your Loved Ones
Probate takes a long time. Some cases may take months, even years! Your loved ones have to pay for legal expenses like attorney fees and such. While all that’s happening, your loved ones won’t be able to touch even a cent from your assets! If your estate avoids probate, your beneficiaries get their inheritance much sooner without having to go through the stress and hassle of court.
Creating a trust lets your estate enjoy all the benefits of avoiding probate. Your rest can be more at peace knowing that you’ve provided for your loved ones. Contact our St George trust lawyer now to establish your trust.
Different Roles in a Trust
There are different types of people involved in a trust. It’s important for you to understand what these roles are and what they do. We’ll discuss the most important ones below.
Grantor in a Trust
This person is also referred to as the settlor or the trustor. The grantor is the person who creates the trust. Their other duties include:
- Transferring property into the trust; and
- Setting the terms and conditions of the trust.
If you’re considering being the grantor of a trust, consult with our St George estate planning lawyer to know how to go about it properly.
Trustee
The trustee’s job is to manage the property placed in the trust by the trustor in accordance with the terms set out in the trust. There can be more than one trustee.Trustees have a fiduciary duty to act in accordance with the trust, and in the best interest of the beneficiaries.
Types of Trustees
- Initial Trustee. The initial trustee(s) are immediately in power over the trust.
- Successor Trustee. Successor trustees take over when the initial trustees are no longer able or willing to function.
Some types of trusts require that various trustees have different roles. You might have a management trustee and an investment trustee. The management trustee manages and runs the assets and the investment trustee sees to the investments of the trust and makes those decisions separate from the other trustees.
It’s important for a trustee to be able to manage the estate properly. If you’re not sure whom to appoint as trustee, consult with our St George trust lawyer to discuss your options.
Types of Trust Beneficiaries
There are two types of beneficiaries:
- Life beneficiary
This person can also be referred to as the initial beneficiary. This person is entitled to the income and use of the assets of the trust in accordance with the trust. Their use is subject to the powers and control of the trustee during their lifetime.
- Remainder beneficiary
The remainder beneficiary gets what is left over, or the remainder of the trust, usually after the death of the life beneficiary.
The goal of a trust is to provide for its beneficiaries. It’s important that the wording of your trust is able to comply with your wishes. Get in touch with our St George Trust lawyer to know how to set up your trust for the benefit of your heirs.
Trust Protector
Another person involved in a trust is referred to as a trust protector. The trust protector’s job is essentially to oversee the trustee. They are given the ability to remove the trustee if the trustee is not following the directions of the trust or acting in the best interest of the beneficiaries.
A trust protector makes sure that your trustees follow your instructions. Talk to our St George trust lawyer to discuss who’s the best person to protect your trust.
Different Types of Trusts in St George
Family Living Trust
The most common type of trust is typically called a family living trust. This is very often a revocable document. The initial trustor, trustee and income or life beneficiary are usually the same people.
Essentially a couple will create a trust in which they appoint themselves as the trustee and name themselves as the initial beneficiaries. They will then name successor trustees to take over management of the assets in the event of their incapacity or death, and persons to receive the income and assets of the trust after their passing.
Even if these are common trusts, it’s important that it’s worded carefully to follow your wishes and provide for your heirs. Contact our skilled family law attorney and trust lawyer in St George, UT for help with creating a trust.
Credit Shelter or A/B Trusts
These were a very common type of trust before the estate tax laws began to change dramatically in 2001 and again in late 2017. Since then, they have not been as common. There are some pitfalls to these trusts and they should be used carefully.
They are used to essentially double the amount of assets that can be passed to a couple’s heirs without an estate tax being paid.
My firm has recently seen some issues with old A/B trusts that are now causing some difficulties for clients. There are solutions, but they need to be addressed before one of the spouses passes away. If you have an old Credit Shelter or A/B trust please get it reviewed and updated if necessary.
Charitable Trusts
A charitable trust is just what it sounds like. It is a trust that has some component of a charitable gift. There are two basic types of charitable trusts.
Charitable Remainder Trust
The first and most common is a charitable remainder trust (CRT). A CRT has two forms, a charitable remainder annuity trust (CRAT) and a charitable remainder unitrust (CRUT). A CRUT is where you hold some asset that is not an annuity.
A CRAT is where you use a lump sum of money to purchase an annuity from which you intend to take the income. Any money left in the trust upon your death goes to the charity you have designated.
Charitable Lead Trust
The second type of charitable trust is a charitable lead trust. In this instance the charity gets the income during your lifetime and then your heirs (usually family) get the remainder.
However, a charitable trust should be done in consultation with your tax professional and financial advisor. There are some amazing financial tools that can make doing this particularly easy in many instances. Get in touch with our law firm for more information on setting up charitable trusts with the help of our St George trust lawyer.
Special Needs Trusts
Special needs trusts are designed to allow individuals with special needs to qualify or maintain “needs-based” government benefits such as Medicaid and supplemental security income.
In general, eligibility for these programs requires that a disabled recipient have less than $2000.00 “countable assets” and limited income. When properly designed, assets held in special needs trust will not be considered “countable” for Medicaid and SSI eligibility.
However, those assets held in the trust can still be used to supplement needs-based government benefits and provide many of the good things in life such as electronics, companionship, vacations, hair care, dental, education, etc.
In order to qualify for need-based government programs the individual needs to be over the age of 65, blind, or disabled. To be considered disabled for purposes of Medicaid and SSI, a person must be unable to: “engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment, which can be expected to result in death, or which has lasted or can be expected to last for continuous period of not less than 12 months” (20 CFR section 416.905).
There are two tests that are used to determine whether someone may qualify for Medicaid or SSI, they are an income test and an asset test. The numbers and qualifications under both of these tests change periodically, so I won’t include those criteria.
Needless to say, it is currently an asset base of less than $2,000.00 with the exception of household goods, tools used for work, a certain amount of home equity, funds set aside for a funeral, and personal effects.
In the income test, disabled individuals cannot make more than $1,170.00 a month and blind individuals cannot make more than $1950 per month. Eligibility for Medicaid and SSI does vary from state to state.
This type of trust helps you care for the most vulnerable of your loved ones. It’s important for your trust to be worded carefully for their benefit. Call our St George trust lawyer at 435-375-3960 to set up a special needs trust today.
Asset Protection Trusts
These are relatively new developments and they are statutory. Some states offer these; some states do not. The requirements vary from state to state and this article refers only to Utah when I describe the asset protection trust concept.
A domestic protection trust is one in which a person or persons place assets in an irrevocable trust that meets the specific requirements of Utah law. Some of those requirements are that the grantor or creator of the trust has limited power over the trust after it is created. Often this trust will have more than one trustee.
Who should Consider Setting up a Utah Asset Protection Trust (UDAPT)?
You should consider a UDAPT if you are in a high-liability profession, or if you have a high net worth. It is also a good option if you just want to protect your business or shield some of your hard earned assets from creditors such as a home, investment accounts, a cabin, a ranch, or other real estate from creditors.
UDAPTs are frequently used to protect a nest-egg. They help to ensure that you have enough assets protected to live a comfortable life, especially given the litigious and unpredictable world we live in where lawsuits can be brought against you for any reason or no reason at all.
How does a UDAPT Work?
Under Utah’s asset protection trust laws, you are allowed to fund a trust with any type of assets you want to protect. You maintain complete control over the investment of the assets in the trust, and you can name yourself, your spouse, and your family as beneficiaries of the trust to receive the assets if you need them in the future, so long as you have a co-trustee who makes distribution decisions. The statute does not prevent you from naming a trusted friend, family member, or advisor as the co-trustee.
For the trust to be effective in shielding your assets against creditors, the trust must have at least one Utah trustee, it must hold some Utah assets (but it can also hold assets in other states), and you must sign an affidavit declaring that you are still solvent (meaning you have more assets than liabilities) after making any contribution to the trust.
The trust must be irrevocable, but flexibility can be built into the trust to allow for the removal and replacement of trustees and to change the ultimate distribution of the assets upon your death. Once you have appropriately moved assets into your UDAPT, those assets are immediately protected against future involuntary creditors.
Existing creditors are limited to bringing a fraudulent conveyance claim within the later of two years after the property is transferred to the trust, or one year after the creditor reasonably could have discovered the transfer. This period can be reduced to 120 days by sending notice to known creditors, and by publishing notice for unknown creditors.
Often, it is good to establish a trust protector to assist in the management and oversight of trustees other than yourself.
Asset protection trusts can be very complicated. However, they do provide protection against creditors. Given its complexity, it’s important to have a skilled attorney helping you establish this trust. Contact our St George trust lawyer today for help setting up your asset protection trust!
Family Partnerships
It used to be a fairly common practice in estate planning to create a family limited partnership. A family limited partnership is when the mother and father establish a limited partnership. They would be the general partners and they would name their children as limited partners. It is designed to take advantage of the annual gift tax exclusion and gradually gift, over a period of years, the ownership of an asset to their children without ever giving up control.
This was a common practice with family farms and real estate. If the value of the asset was such that it would cause an estate tax problem, we would take advantage of the annual gift tax exclusion and gradually transfer the illiquid asset to the children as limited partners. This would minimize the taxable estate and avoid the need to fire sell or encumber the asset to pay the estate tax.
Since the United States Congress has substantially increased the exemption amounts from the estate tax these are a less common vehicle. However, there may be an old family limited partnership that was set up perhaps by your parents or grandparents, that might be worth reviewing with an attorney to see if there would be a more efficient means of distributing the asset at this time.
A family limited partnership allows you to provide for your children without losing control of the assets. Our St George trust lawyer can help you word out the legalese so you can do this with no problem. Contact our law office today to help set one up!
Hire our St George Lawyer to Establish your Trust
A trust lets you provide instructions for how and when your heirs can receive your trust. This can help you avoid probate and make life much easier for your beneficiaries for generations to come. It’s important for you to properly set up your trust so that your beneficiaries are cared for!
Our professional St George Utah attorneys at Boyack Christiansen Legal Solutions can help you avoid probate and make life a thousand times easier for your heirs. Call our St George estate planning law firm today to get the legal solutions for your estate.
