Most people do not give the subject of estate planning much thought, so they go forward with some rudimentary ideas that are not entirely true. One of them is the notion that a trust is a document that is used by multimillionaires who have very complicated objectives.
In reality, there are many types of trusts that serve diverse purposes. Yes, there are trusts that provide estate tax efficiency, and we can help you devise a plan if you have these concerns.
At the same time, a different type of trust can be quite useful even if your estate will not be exposed to the estate tax. We are going to explain some of them over the coming weeks, and we will start with a device called the testamentary trust.
When you draw up a will, you name an executor to act as the estate administrator. In your will, you can instruct the executor to establish a trust after you pass away. This would be called a testamentary trust.
Some of your property could be transferred through the terms of the will, and the trust may be included to serve a particular purpose.
Why would someone establish this type of trust? A testamentary trust can be a good way to protect the interests of a minor child, and this is the most common reason why they are used.
Let’s say that you are the parent of a dependent child, and you have a life insurance policy on your life. You can establish a testamentary trust in your will, name a trustee, and make the trust the beneficiary of the insurance policy.
If you pass away while this arrangement is still in place, the executor would establish trust, and it would be administered by the trustee that you named in the document. It should be noted that the trustee can be the same person that will act as the executor, but this is not required.
You set the distribution terms when you establish your estate plan. For example, you can instruct the trustee to cover expenses that are incurred on behalf of the dependent child. The terms can give the child complete control of the trust when they reach a certain adult age if this is your choice.
This is one reason why people use testamentary trusts, and they are sometimes utilized to provide for individuals that are relying on need-based government benefits.
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In addition to this content, there are many other written resources that you can tap into if you take some time to explore our site. One of the tools that we encourage you to take advantage of is our estate planning worksheet.
This worksheet has been carefully prepared to give you a more comprehensive understanding of this important process, and it is very easy to go through. It is being offered free of charge, and you can head over to our worksheet access page to get your copy.
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We know that it can be disconcerting to discuss personal matters with an attorney you have just met. This is one of the reasons why so many people procrastinate when it comes to this important responsibility, and it is understandable to some extent.
When you work with our firm, you can rest assured that you will feel completely comfortable every step of the way. We apply the golden rule to our interactions with our clients, and we endeavor to build long-term relationships built on mutual trust.
If you are ready to make the ideal estate planning connection, we can be reached by phone at 802-879-7133. There is also a contact form on this site you can use to send us a message, if you reach out electronically, you can expect to receive a prompt response.
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