Types of Trusts to Consider for Your Boca Raton Estate Plan
Trusts are an integral part of a Boca Raton estate plan, but not all trusts are created equal. Depending on your particular estate, what works for you may not work for someone else. This is why you should meet with an experienced West Palm Beach estate planning attorney. Your attorney can explain the benefits of each trust and let you know what type(s) will work best for your particular situation.
Who are the Parties in a Trust?
Trusts have three parties. The person who creates the trust is known as the trustor. The trustee is the person who is responsible for looking over the assets in the trust. Beneficiaries are those entitled to receive a portion, or all, of what is in the trust.
A living trust is sometimes known as an inter-vivos trust. It’s made during the trustor’s lifetime and the property is intended for use by the trustor during his or her lifetime. This is one of the most common types of trusts, and it allows the trustor to benefit from the trust while he or she is still alive. Once the trustor passes away, the property and other assets will pass along to a beneficiary through a trustee. In most cases, you can avoid probate with a living trust.
Revocable and Irrevocable Trusts
Revocable trusts are created during the trustor’s life, and they can be altered, changed, or even terminated during his or her lifetime. It is typically set up to transfer assets outside of a probate administration. In this situation, the trustor, trustee, and the beneficiary might be the same person. He or she will manage the assets while alive, but this responsibility is transferred over to another trustee and beneficiaries upon their death.
As its name suggests, an irrevocable trust is one that the trustor cannot change during his or her lifetime and it cannot be revoked once they pass away. These are common for people looking to reduce tax liabilities since they transfer assets entirely out of the trustor’s name and into that of another beneficiary.
Charitable trusts name non-profit organizations or a charity as its beneficiaries. In most situations, a trust is built up during the trustor’s life and will be paid out to the charitable beneficiary, which will help to avoid gift taxes and/or reduce or avoid estate taxes. Charitable trusts can also be part of the normal trust with your regular intended beneficiaries receiving a portion of the trust while the charity receives the remainder.
With an insurance trust, the trustor can hold their life insurance policy into the trust, which keeps it from being subject to taxes on the estate. It’s an irrevocable trust and will not allow the trustor to make changes or even borrow against the policy, but the trustor can specify that the life insurance policy help pay for expenses on the estate once he or she passes away. The key element here is the insurance policy is not owned by the trustor, which is how it avoids being part of the taxable estate.
Contact a Boca Raton Estate Planning Attorney
The aforementioned types of trusts are just some options you have available. If you need assistance setting up a trust, contact the Law Offices of Larry E. Bray, P.A. today to schedule an initial consultation.