Want to learn more about the types of trusts?
Trusts are a great tool to avoid probate and provide certain tax benefits as well. Many clients go see an attorney who plugs in names, numbers and print. The clients sign, and technically they do have a functioning trust but there are so many more benefits to a trust that can help fulfill a client’s estate planning needs.
Types of Trusts
A family trust is helpful for a couple who is under the inheritance tax exemption, but a family may consider doing an A and B trust to make sure certain assets pass from one trust to another upon death, while others are distributed outright so that a couple may take full advantage of the tax exemption. A and B trusts are also useful for couples that have children from two different marriages, couples who have separately titled assets, or even same-sex couples. This is one of the types of trusts to consider.
A bypass trust can be created for the purposes of benefitting a surviving spouse but also protecting the surviving spouse’s heirs from estate taxes. A bypass trust can protect a surviving spouse from exceeding the gift tax exemption due to post-death appreciation of assets. If a surviving spouse inherits all assets at the time of death without the proper protections. Then that surviving spouse may be subject to taxes on the appreciation in value of those assets. The surviving spouse’s bypass trust would also protect them from creditors and even from a divorce in a subsequent marriage. A qualified terminable interest property trust can also protect assets from creditor’s claims.
There are trusts for non-citizen surviving spouses known as a qualified domestic trust. These protect the marital deduction and the estate taxes to a non-citizen. There are also Charitable Trusts that can be a great estate planning tool for those who want to continue to contribute to their most cherished charity in the future.
These are only a few of the different types of trusts that can help fulfill a client’s wishes. Depending on each client’s need a combination of trusts can be created. This ensures protection from taxes, creditors, even the heirs themselves.