Should A Trust Be Part Of Your Estate Plan?
Trusts have many purposes, both for financial planning objectives while you are alive and for succession and testamentary functions once you have passed. They may help you avoid probate, reduce taxes or provide for a loved one with special needs. An experienced estate planning attorney can help you determine whether a trust would benefit your estate plan.
At Hanis Irvine Prothero, PLLC, our estate planning attorneys include Patrick Hanis and Dennis Shanlian. Together, they have over 60 years of experience assisting clients in making the right choices to secure their legacies for future generations. They understand how to tailor your plan to fit your specific needs and goals, and will explain to you how trusts can help you meet those goals.
Understanding The Function Of Trusts
When you create a trust, you, as the grantor, are creating a separate entity from yourself, almost like opening a business. Although you may choose to administer the trust yourself as the trustee, you may also appoint someone else to this role. When you put assets into the trust, referred to as funding the trust, you no longer own those assets. Your trust does, and the trustee is now responsible for those assets. For this reason, trusts do not have to go through the probate process when you die. Technically, you no longer own the property held by the trust. When you become incapacitated or die, a new trustee must take over the trust, if they have not already done so.
Common Types Of Trusts
Although there are too many types of trusts to list here, the most common trusts in Washington fall into several categories:
- Testamentary trusts – You may choose to wait to create and fund a trust until after you have already passed. These trusts are created in the will document and go into effect upon the death of the grantor. Some examples of testamentary trusts include special needs trusts, credit shelter trusts and marital deduction trusts.
- Living trusts – Most trusts are created as living trusts, which simply means you create and fund the trust while you are still alive. In this scenario, you may or may not choose to be the trustee while you are alive, and can choose how long the trust survives after your death.
- Revocable trust – Most living trusts are revocable, which means you, as the grantor, can revoke the trust, amend its terms or make other changes. Certain specialty trusts cannot be revoked, which allows tax advantages or other benefits. Likewise, many testamentary trusts are irrevocable since the grantor has already passed away.
Under these broad categories, many specific types of trusts exist. No matter your estate planning goals, our attorneys will use their extensive knowledge of trusts to help you decide whether they can help you reach your goals. In addition, if a disagreement arises regarding a trust, we can represent your interests in trust litigation.