Choosing The Right Trust For Your Estate Planning
Trusts are a powerful tool in estate planning. They allow you to distribute property and assets to your beneficiaries while avoiding complicated and potentially costly probate hearings, offer tax benefits, and can help shield you against collections from creditors or in lawsuits. There are a variety of trusts you can select to suit your specific purposes, and the following outlines some of the most common types you may want to consider as part of your overall estate plan.
Basic Types of Trusts
Under New York laws governing wills, trusts, and estates, trusts allow you to transfer property and assets to others during your lifetime, and there are two primary types of trusts to choose from:
- Revocable trusts allow you to transfer assets while still retaining control and as the name implies, can be revoked at any time.
- Irrevocable trusts, in which the assets included are no longer considered yours and once created, cannot be changed or altered in any way.
Creating a trust does not take the place of or mean you should neglect making a will. Trusts allow you to transfer and protect certain specific assets, while your will addresses your estate as a whole and how it will be distributed.
Trusts Catered to Particular Needs
CNN Money recommends considering the following additional types of trusts, which are designed to address specific situations:
Credit shelter trusts, in which you may bequeath an amount from your will up to the estate tax exemption level, allowing it to be shielded from both creditor claims and estate taxes;
Qualified personal residence trusts, which can be used to reduce the size of your estate by removing the value of your home or a vacation property while retaining personal use;
Irrevocable life insurance trusts, which remove the value of your life insurance policy from your estate. While you will no longer be able to borrow against or change beneficiaries, it can help pay estate costs while providing heirs with cash when they need it;
Qualified terminable interest property trusts, which can be particularly useful for designating beneficiaries in families where there have been divorces and remarriages. These allow your surviving spouse to receive income from the trust during their lifetime, while leaving the remainder to the family members of your choosing;
Generation-skipping trusts, which let you transfer substantial amounts to future generations, such as grandchildren and great grandchildren, while avoiding taxes.
Additional types of trusts to consider are charitable trusts, designed to benefit a particular cause or nonprofit, and special needs trusts, which can help provide for family members who receive government benefits.
Reach Out to Us Today for Help
For professional legal guidance in establishing an estate planning and determining the right type of trust to suit your needs, contact the offices of Cavallo & Cavallo today. Our knowledge of state and federal laws and our skill in handling a variety of different types of complicated estate planning matters both ensure that the current and future needs of you and your loved ones will be protected. We serve the Bronx, Westchester, and the surrounding areas; call or contact us online to schedule a consultation with our professional estate planning attorneys today.