Trusts

A trust is a legal entity created to manage a person’s assets and income for the benefit of designated beneficiaries. A trustee is named to manage the trust. Depending upon the nature of the trust, the trustee may be the person who created the trust (the grantor), another individual, or a financial institution such as a bank.

Different types of trusts may be established for various purposes. Some examples of the most commonly used trusts include:

  • Testamentary Trust: A testamentary trust comes into existence upon the death of a person. For example, a person may want to create a trust to provide for their children (either minor or adult) in the event of their death. This allows the trustee to control the terms under which a child might receive his or her share of the funds and for what purposes said funds may be used.
  • Living Trust: A living trust is created and goes into effect during a person’s lifetime. A benefit of a living trust is that it avoids probate upon a person’s death. Probate is the court-supervised process of administering the estate and transferring property at death pursuant to the terms of the deceased’s will or per the laws of the state.   Many people wish to avoid the probate process to ensure the administration of their end-of-life affairs is simple and straightforward for their loved ones.  Avoiding probate may be valuable when a person owns property in multiple states. A living trust also maintains greater privacy regarding the assets of an estate. However, the existence of a trust alone does not bypass any inheritance tax that may due upon a person’s death.
  • Special Needs Trust: A special needs trust is established on behalf of a person with special needs or disabilities. The trust provides the trustee with specific instructions on how funds for the beneficiary should be disbursed. A benefit of a special needs trust is to provide financially for a loved one, without jeopardizing his or her eligibility for certain benefits, such as Supplemental Security Income (SSI) or Medicaid benefits.
  • Charitable Trust: A charitable trust is designed to distribute funds to a charitable organization. This allows the grantor to designate the amount of funds, the specific use for the funds, and a time frame for distributing said gifts to the organization. Charitable trusts can assist people in their intentions generously give to charities of their choosing, while also maintaining wealth, as there are certain tax incentives that may be taken advantage of by giving through a charitable trust.

Contact our office to schedule a consultation with an attorney to assist you in deciding whether a trust is the appropriate estate planning tool to meet your specific needs.  At Koenig|Dunne, we will work closely with you to make recommendations regarding the specific estate planning mechanism that will fulfill your goals of protecting your family and estate.