What Role Do Trusts Play in Legacy Planning?
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While planning for the future is essential for anyone, it can be especially important for people and families with a high net worth. Legacy planning can ensure that loved ones are taken care of and that a person’s assets will be distributed according to the person’s wishes, while also upholding the person’s values, promoting causes he or she believes in, and establishing a positive framework that a family can continue to follow. Trusts are a powerful tool in legacy planning, providing flexibility, control, and tax benefits that can help a person achieve their goals. An experienced attorney can help create and manage trusts to ensure that your legacy will be protected.
Understanding Trusts
A trust is a legal arrangement in which a trustee will hold and manage assets for the benefit of one or more beneficiaries. The person who creates the trust is known as the grantor or settlor. Trusts can be tailored to meet various needs, and they can be a key component of a comprehensive legacy plan.
Types of Trusts
There are several types of trusts that may serve different purposes in legacy planning. These include:
- Revocable living trusts: When a trust is revocable, the grantor will be able to retain control over assets during the grantor’s lifetime, and can make changes to the trust as needed. Revocable living trusts offer several benefits, including the ability to avoid probate and transfer assets to beneficiaries more quickly and efficiently. This type of trust also provides flexibility, and if the grantor becomes incapacitated, a successor trustee can manage the trust’s assets without court intervention.
- Irrevocable trusts: This type of trust cannot be altered or revoked once they are established, except under specific circumstances. Assets in irrevocable trusts will be removed from the grantor’s taxable estate, providing potential tax benefits and asset protection. Irrevocable trusts can be designed for specific purposes, such as charitable giving or education funding.
- Testamentary trusts: This type of trust is created through a will and takes effect upon the grantor’s death. Testamentary trusts may be used to provide for minor children or beneficiaries with special needs. The grantor can set conditions on how and when assets will be distributed to beneficiaries, which can ensure that assets will be managed responsibly until the beneficiaries reach a specified age or milestone.
- Special needs trusts: A person may take steps to provide for a beneficiary with disabilities while preserving the beneficiary’s eligibility for government assistance programs. Assets in a special needs trust are not counted as income for eligibility purposes, and they can enhance a person’s quality of life by meeting specific needs. A trustee can manage the assets to ensure they are used appropriately for approved purposes.
How an Attorney Can Help With Trusts and Legacy Planning
Creating and managing trusts can be a complex matter. To ensure that trusts can be used effectively, it is important to have a thorough understanding of the legal issues and the tax implications of holding assets in trusts. An experienced Naperville attorney can help ensure that trusts are used correctly during legacy planning by:
- Determining the best types of trust to meet a person’s specific goals.
- Drafting and executing trust documents to ensure they are legally sound.
- Managing and administering trusts in accordance with a person’s wishes while meeting all applicable legal requirements.
- Providing guidance on when an estate plan should be updated as circumstances change, ensuring that a person’s legacy will be protected.
Contact Our Naperville, IL Legacy Planning Lawyer
Trusts play a vital role in legacy planning, offering numerous benefits and flexibility to meet the unique needs of a person and their family. To learn more about how the Gierach Law Firm can help you use trusts to secure your legacy, contact our DuPage County trusts attorney at 630-228-9413 and schedule a consultation.
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Please note: These blogs have been created over a period of time and laws and information can change. For the most current information on a topic you are interested in please seek proper legal counsel.