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Southern New England's Certified Elder Law Attorney
Rhode Island, Connecticut, and Massachusetts Certified Elder Law Attorney
Trusts
What is a Trust?
A trust is a sophisticated financial entity that is legally distinct from your personal estate, designed specifically to safeguard, cultivate, and allocate your accumulated assets in a manner that aligns with your intentions and wishes. When you establish a trust, it serves as a repository for various types of assets, such as your home, life insurance policies, bank accounts, investment portfolios, and other valuable properties. Upon your passing, the trust ensures these assets are distributed according to the terms you have set forth, minimizing the likelihood of disputes among heirs.
The individual who creates the trust is called the grantor or trustor. As the grantor places assets into the trust, it’s essential to understand that these assets are no longer considered part of the grantor's estate, which can provide significant legal and financial advantages. To oversee and manage the trust effectively, a trustee is appointed. The trustee can be an individual or an institution, and their primary responsibilities include administering the trust’s assets, ensuring compliance with legal requirements, and carrying out the distribution process as outlined by the grantor’s instructions.
Establishing a trust provides a vital legal mechanism to separate you from the wealth you intend to pass on, allowing for a structured approach to asset management. Various benefits can accrue depending on the type of trust you decide to create—such as revocable living trusts, irrevocable trusts, or special needs trusts. Among these advantages are enhanced control over your wealth, the preservation of your legacy, and the potential for saving on estate taxes. Additionally, a trust can help eliminate or expedite the often complex probate process, allowing for a smoother transition of assets to your beneficiaries.
The establishment of a trust comes with numerous strategic benefits that serve to protect your interests and those of your heirs, ensuring that your wealth is managed and distributed in accordance with your legacy and wishes.
A will and a trust are key components of estate planning, but they serve different purposes. While everyone should have a will, not everyone needs a trust, though both can provide significant benefits.
A will is a legal document that takes effect upon your death, detailing guardianship for minor children, asset distribution, funeral preferences, and specific instructions for personal items. It must go through the probate process, making it a public document that can expose its contents to anyone.
In contrast, a trust is established during your lifetime and manages your assets according to your instructions without specifying guardianship or funeral wishes. By transferring ownership of assets into the trust, it generally avoids probate, saving time and money for your family. Trusts are private, providing confidentiality about your estate.
While a will and a trust serve different roles, they form a comprehensive estate planning strategy that helps honor your wishes and manage your legacy effectively.
The Revocable Trust
A Revocable Trust is a vital tool in estate planning, offering several benefits that can greatly impact you and your estate:
Avoiding Probate: A key advantage of a Revocable Living Trust is its ability to bypass the lengthy and costly probate process, allowing for a quicker distribution of assets to beneficiaries.
Streamlined Asset Distribution: It provides a clear method for asset distribution, enabling you to specify how and when your assets should be passed on, thereby reducing potential family disputes.
Incapacity Planning: If you become incapacitated, a trust allows your appointed trustee to manage your assets without needing a court-ordered conservatorship, ensuring your finances are handled as you wish.
Documenting Your Wishes: The trust serves as a legal document outlining your preferences during incapacity or death, providing peace of mind for you and your family.
Crisis Avoidance: It helps prevent crises or family conflicts regarding your care and assets by ensuring a well-defined plan.
Unlike a will, a Revocable Trust offers more flexibility and control over your assets during your lifetime and beyond, making it an important choice for those considering their legacy and loved ones' futures.
The Irrevocable Trust
An irrevocable trust is a trust that cannot be altered or revoked by the grantor once established. When assets are transferred into this trust, the grantor loses all rights to those assets, removing them from their taxable estate.
The primary reasons for creating an irrevocable trust include achieving estate and tax benefits, as the assets no longer count towards the grantor's taxable estate, potentially reducing estate taxes. Additionally, these assets are usually protected from creditors, safeguarding beneficiaries.
However, the lack of flexibility is a downside; the grantor cannot change the trust without the beneficiaries' consent. Many people prefer revocable living trusts, which allow for adjustments and easier access to assets during the grantor’s lifetime.
Special Needs Trust
A special needs trust is a legal arrangement specifically designed to benefit individuals with special needs by managing their assets without jeopardizing their eligibility for essential government benefits, such as Supplemental Security Income (SSI) or Medicaid.
The primary purpose of such a trust is to provide financial support that enhances the quality of life for the individual while ensuring compliance with regulations governing public assistance programs.
There are several types of special needs trusts, each serving distinct purposes based on the assets' source and the beneficiary's needs. For more on Special Needs Trusts, click here.
Consult Connelly Law
When selecting a trusts and estates attorney in Southern New England, you should consider Connelly Law's extensive experience and personalized service. With decades of dedicated practice, our firm takes a hands-on approach, ensuring that each client receives tailored guidance throughout the intricacies of trust and estate law. Our deep understanding of the legal landscape positions us as leaders in this specialized field, allowing us to effectively protect your legacy and secure a stable future for your family. To discuss your unique circumstances and explore how we can assist you, we invite you to reach out for a consultation. Contact us today at 401-724-9400 to schedule an appointment with our dedicated team at Connelly Law.
"The most important thing to consider when setting up a trust is its purpose, and you do not have to be sitting on a million dollars to provide for your loved ones or your estate with a trust. Remember, trusts are a sophisticated estate planning tool that can provide added benefits that a will cannot offer. Call us today to discuss how we can design a trust that meets your needs."
---- RJ Connelly III
Rhode Island, Massachusetts, and Connecticut Certified Elder Law Attorney
"Southern New England's Certified Elder Law Attorney"
Call Connelly Law Today
Rhode Island Elder Law Attorney
Phone: 401-724-9400
Fax: 401-724-3046
Our office locations
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East Chop, MA 02557
508-316-2396
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This website includes general information about legal issues, issues affecting seniors and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal issues and/or problems.