A Trust Can Protect Your Assets
A Trust is a legal document created to preserve assets in the event of a death. A Trust is like a Will, but it has several unique advantages. A Trust can be used to avoid your family going through the probate process when you pass away. If all your assets are included in a Trust, there is nothing to distribute through a Will. The Law Office of Steve Ortega, PLLC, can help you determine if a Trust is right for you and what kind of Trust. In the long run, it is more cost-effective to set up a Trust than, and your family, avoids probate court in the future.
How Do Trusts Work?
A Trust is a legal arrangement where a Trustee holds the title of your assets and will be responsible for managing and distributing your assets to the beneficiaries you select. A Trust will ensure your assets are adequately managed for beneficiaries unable or not of age to make wise decisions. Certain types of Trusts allow assets, life insurance payouts, or property to be passed to the beneficiaries without being taxed. Having a Trust will also keep your estate out of a probate court. Probate court is a lengthy process that you would not your family to go through if you could avoid it.
A Trust can help you with the following:
• Secure your family's finances
• Prevent probate or contest of your will
• Reduce estate taxes
• Leave a plan if you ever become incapacitated
Different types of Trusts:
Testamentary Trust-
A Trust that is made in your will to retain and secure the assets that will be given to the named beneficiaries. The Trustee will collect and distribute the assets to each beneficiary listed in your will according to the terms in the Trust.
Living Trust-
Ongoing Trust made during your lifetime for your benefit. There are two types of a living Trust. The first one is a revocable Trust, meaning you can make changes or terminate it at any time during your lifetime, but it cannot be changed after you die. The second is an irrevocable Trust, meaning you cannot make changes or be terminated after it is created. Another term for a living Trust is a management Trust, usually used by people who want to avoid probate.
This Trust will also help as a tool in the event you were ever to become incapacitated.
Irrevocable Life Insurance Trust-
allows you to own a life insurance policy and exclude it from your estate for tax purposes.
Crummey Trust-
Allows gifts in a Trust that can reduce your potential amount that can be taxed. This can be set up if a parent or grandparent is paying for a child's education.
Spendthrift Trust-
Protects the assets in the Trust from being taken away by creditors.
Special Needs Trust-
This Trust allows a person under 65 and disabled to receive funds from the Trust and retain benefits from the government. Two types of special needs Trust exist, a self-settled and a third party. Self-settled allows funds to be paid from the Trust to the beneficiary along with Medicaid. If the beneficiary dies or recovers from the disability, the Trust must pay the State of Texas back. A third-party Trust is established by a thirst party that uses the assets to create the Trust. When the Trust is terminated, the assets can be distributed to beneficiaries the grantor listed. This Trust does not pay back money to the State of Texas.
Qualified Income Trust-
This type of Trust can help a person qualify for Medicaid when the person's income goes over the eligibility limit for long-term care assistance needed from Medicaid.
Pet Trust-
This Trust is what it sounds like, care for your pets. This Trust will make sure your pets are taken care of if you are no longer able to or pass away.
The Law Office of Steve Ortega, PLLC, can guide you on what Trust best fits your situation. Give us a call today to schedule a consultation.
