Once you take the important step of beginning to plan your estate, working with an experienced, highly skilled estate planning attorney is essential. If you live in Virginia, Randall J. Borden, Attorney at Law is here to offer you excellent legal counsel. Not only does he have the legal acuity to provide you with appropriate guidance; but he also has several estate planning tools to help you create the most cost-effective strategy to meet your needs. In many cases, that cost-effective strategy will include trusts.
Understanding What Trusts Can Accomplish
A trust is a fiduciary arrangement in which a designated trustee holds and manages assets on behalf of beneficiaries at the request of the grantor (the person who created the trust). A trust gives the grantor the ability to determine how and when their assets will be distributed, providing them with control, protection, and potentially significant tax advantages. A trust involves three parties: the grantor (who creates the trust), the trustee (who manages the trust), and the beneficiaries (who receive the assets).
Revocable vs. Irrevocable Trusts
Revocable Trusts, also known as living trusts, can be altered or revoked by the grantor during their lifetime. This flexibility allows for adjustments as life circumstances change. However, assets in a revocable trust are still considered part of the estate for tax purposes.
Irrevocable Trusts, once established, cannot easily be modified or revoked. While this restriction lessens the grantor’s control, it provides significant asset protection and tax advantages since assets in irrevocable trusts are not generally considered part of the grantor’s taxable estate.
Common Types of Trusts
There are many kinds of trusts, each designed to meet a specific financial and/or personal need or goal. Below are some examples of trusts in common use:
- Living trusts ensure that the grantor’s instructions are properly carried out. While the trust takes ownership of your property, you continue to manage it during your lifetime. However, because you no longer own the property, the trust does not have to be probated. This can allow your beneficiaries to avoid probate’s anticipated delays, additional costs, and lack of privacy.
- Testamentary trusts, established through your will, come into effect after your passing. They offer control over asset distribution and lessen estate tax liabilities.
- Charitable Trusts are set up to benefit a particular charity. They can be structured to provide tax benefits to the grantor while also supporting philanthropic goals.
- Special Needs Trusts are designed for beneficiaries with disabilities. These ensure that family members with physical, mental, or psychiatric challenges receive inheritances to improve their quality of life without affecting their eligibility for government benefits like Medicaid or Social Security Disability (SSD).
- Spendthrift Trusts protect a beneficiary from their own worst impulses as well as from predatory lenders and scam artists. The trust funds are meted out by the trustee according to specific directions of the grantor to prevent an irresponsible beneficiary from blowing through an inheritance due to substance abuse, gambling addiction, or poor judgment.
Some Trusts Are Especially Helpful for Those with High-Net-Worth Estates
For individuals with significant assets, trusts can be beneficial in several ways, including:
- By reducing federal and state estate taxes
- By protecting assets from creditors, lawsuits, the IRS, and predatory scams
- By facilitating and streamlining the transfer of wealth outside of a will
Some types of trusts that can be particularly beneficial to high-net-worth individuals include:
- Irrevocable life insurance trusts
- IRA trusts
- Family trusts
- Generation-skipping trusts
- Gift trusts
- Grantor-retained annuity /unit trusts
- Qualified personal residence trusts
- Spousal lifetime access trusts
What Is Trust Administration?
Our experienced trust attorney will explain the significance of choosing the right individual to fill the role of trustee. This person must not only be loyal and honest, but should be detail-oriented and able to handle the complex tasks of managing a trust in terms of legal compliance, meticulous attention to financial matters, and adherence to the fiduciary code of ethics.
A trustee’s responsibilities include:
- Notifying beneficiaries of the grantor’s passing
- Inventorying trust assets and, if necessary, having them appraised
- Managing and distributing trust assets according to trust stipulations
- Overseeing investments and making sure they are low-risk
- Working with accountants to file income tax returns
- Keeping clear and meaningful records of trust expenditures
- Preparing and distributing trust accountings to beneficiaries
- Making sure the trust complies with all state legal requirements
It should be noted that a trustee will be held accountable for misconduct. Depending on the severity of the wrongdoing, penalties may include suspension or termination of duties as trustee, monetary damages, court expenses, and attorney fees.
An Experienced Attorney’s Central Role in Creating Legally Binding Trusts
Accomplished estate planning attorneys serve a pivotal purpose in crafting and managing trusts. Having the right lawyer at the helm will provide peace of mind. Randall Borden’s experience and aptitude ensure that your trusts will be well-crafted in terms of:
- Complying with all state and federal trust laws
- Providing customized trust solutions to meet your specific needs and goals
- Focusing on potential future scenarios by planning for possible changes in laws, family dynamics, and financial situations
- Reducing risks by identifying and addressing potential pitfalls in trust management
Contact Attorney Randall J. Borden for Trusts You Can Trust in Virginia
Trusts are a fundamental aspect of estate planning, providing flexibility, protection, and tax advantages. However, without a trust attorney who knows precisely how to create them, they can be ineffective, risky, or divisive. Contact our office to have your trust established by an attorney steeped in sufficient knowledge and know-how to meet the complex standards involved.