Have you been thinking about starting your Estate Planning, but have no clue where to start? Did you know that you aren’t bound to one type of Trust? Trusts come in many “flavors.” They can be modified to accommodate your lifestyle. Here are five examples of different Trusts that can be used to achieve specific planning goals.
Let’s say your son has remarried and you’re worried that his second wife might not pass his inheritance to the children from your son’s first marriage—that is, your grandchildren. Or maybe one of your children is not responsible enough to handle an inheritance on his or her own and you want to make sure your grandchildren will receive a portion of your assets. With a Generation-Skipping Trust, the assets put into the Trust will be transferred to your grandchildren when the GST goes into effect. A GST does not necessarily disinherit your children. The Trust can be structured so that your children can draw on the income/earnings from the Trust while your grandchildren stand to inherit the balance of the Trust.
A QTIP is an excellent tool for blended families. It allows you to pass earnings from Trust assets to one person while the assets themselves remain in the Trust for the benefit of another person. Why is this useful?
What if you and your spouse both have children from previous marriages? Or you’re worried that your spouse will remarry and the new spouse will take marital ownership of your estate?
You want to make sure your spouse is provided for after you pass away, but you also want to ensure that your estate is properly divided among your children. You don’t want the new spouse or the children from your spouse’s first marriage to receive most or all of your estate. With a QTIP, your spouse can access the income from the Trust while your children will inherit as much of the Trust’s assets as you see fit. Again, the QTIP allows you to provide for your spouse and your children.
Typically, the beneficiaries named in your IRA will receive the IRA’s money when you pass away. However, if one of your beneficiaries is, for example, a minor child, an IRA Trust can allow you to have the payments distributed over time after your child becomes an adult. An IRA Trust can also be structured like a QTIP, allowing you to support a surviving spouse with Trust income while leaving the assets of the Trust to your children or other beneficiaries.
If you have a loved one with special needs, A Special Needs Trust allows you to create a fund to augment services and care not provided by government assistance programs such as Supplemental Security Income (SSI) while at the same time maintaining eligibility for these Fiaccessible transportation, education, advanced dental and medical care, and more. In essence, a Special Needs Trust can provide for services capable of dramatically improving the quality of life of your loved one with special needs.
This Trust is an excellent way for high-net-worth married couples to minimize or avoid federal estate taxes. How? Both spouses could have a provision in their Wills setting up the CST. When the first spouse passes away, the CST kicks in and is funded up to the federal estate tax exemption amount. The assets in the CST are no longer part of the taxable estate but the surviving spouse can still use a small percentage of that money for income. When the second spouse dies, the funds in the Credit Shelter Trust can pass to heirs free of federal estate taxes.
These are just five examples of different types of Trusts you can use to protect your assets. Contact us today to discuss additional estate planning tools and strategies to create your own personalized estate plan.
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