using trusts in your estate plan

7/27/2019 Using Trusts in Your Estate Plan

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WHY YOUR WASHINGTON

ESTATE PLAN WILL

INCLUDE AT LEAST ONETYPE OF TRUST

A Closer Look at These Flexible, Powerful,

and Beneficial Estate Planning ToolsCalled Trusts – What They Do

and Why They Are Important

GEOFFREY GARRETTWashington Estate Planning Attorney

http://www.byrdgarrett.com/estate_planning/estate-planning/

http://www.byrdgarrett.com/estate_planning/estate-planning/



Byrd Garrett PLLC|Why Your Washington Estate Plan Will Include at Least One Type of Trust 2

Creating and using one or more types of trusts is an essential step in the modern

estate planning process. Whether you are young person just starting out in life,

or an older person who wants to secure your affairs while there is still time,

trusts will likely play a major part in your estate planning efforts. To get a better

idea of what trusts do and why they are so important, let’s take a closer look at

these flexible, powerful, and beneficial estate planning tools.

TRUST BASICS

The basic process in creating a trust starts when you sit down with your estate

planning attorney and decide to create the trust instrument or trust agreement.

This is a document that contains specific terms and choices that you need to

write down in order to actually create

the trust.

All trusts essentially create a legal

entity that can own your property.

You transfer some of that property to

the trust, then direct how the trust

should use that property. Once you

do this, the property is no longer yours, even though you can control or direct

who gets to use it.

Though different trusts will contain different elements, all trusts will include the

following pieces:

Purpose. Your trust instrument will state the reasons why you are creating

your trust. The specific purpose will differ depending on the type of trustyou want to create.

Trustee. The trustee will have the responsibility of managing all the

property of the trust owns. Depending on the type of trust you create, you




might serve as the trustee, but you might also name someone else, such

as a bank or a professional advisor.

Beneficiaries. The beneficiaries get benefit from the trust property.

Beneficiaries can be almost anyone, including family members, third-party

charities, or even yourself.

Schedule of assets. The property your trust owns will often be included in

a separate form known as the schedule of assets or trust inventory. This

list of assets can change over time as the trustee manages the trust and

adds or removes property from it.

Signature. As the trustor —a person who creates trust —you will have to

sign the trust document before it becomes effective. If you’re physically

unable to sign, you can direct someone to sign on your behalf.

FORMATION AND TERMINOLOGY

You can differentiate between types of trusts by determining when they take

effect and whether you can change the trust terms after you create it. A trust

that takes effect during your lifetime is known as a living trust, while one that

takes effect only after you die is known as a testamentary trust.

A revocable trust is a trust that you can modify when you wish, but an

irrevocable trust is one that, once you create, cannot be changed. In general,

only the trustor can change trust terms, not the trustee.

TYPES OF TRUSTS

Though all trust instruments are very similar, the specific types of trusts you can

create differ significantly. Your estate planning lawyer will give you detailed

information about the types of trusts available, but here are some of the most

commonly used types.

Revocable living trust. Also called an inter vivos trust, a revocable living

trust gives your estate the ability to avoid the probate process. Probate is




the set of rules and procedures that apply to any property you leave

behind after you die. If you transfer your property into a living trust while

you are still alive, you can use that trust to direct how you want to

transfer the property after you die without the necessity of first going

through probate.

Testamentary trust. A testamentary trust is one you set up through your

last will and testament. It directs that the inheritances you leave to any

minor children or grandchildren will be held in trust and managed by a

trustee until those children become old enough. You can also direct, for

example, that the trustee will manage the inheritances until the children

reach a certain age, such as 21 or 25, or until they graduate from college.

Irrevocable life insurance trust. People with life insurance policies can use

an irrevocable life insurance trust to protect the death benefit from

creditors or those seeking to collect the premiums. Through this type of

trust you can direct that your insurance policy will pay any death benefit

to the trust itself, which will then distribute the proceeds to the

beneficiaries you select.

Medicaid trust. Preparing for the costs associated with long-term care can

be difficult, but creating the right type of Medicaid trust can help you do

that. Through a Medicaid trust you can structure your assets so that you

both qualify for Medicaid and maintain control over as much of your

property as possible. Otherwise, you will have to spend your assets down

to the predetermined Medicaid qualification limit if you plan on using the

program to pay for long-term care costs.

Special needs trust. For anyone who wishes to protect a child or an adult

with special needs, you can create a special needs trust that will allow you

to provide f or the disabled person’s financial requirements while at the

same time giving that person the ability to take advantage of any

available government programs. Many government programs are based

on income or asset levels, and if a special needs person receives a large




inheritance, that might disqualify him or her from receiving the

government benefit. By placing the inheritance in the special needs trust,

you can ensure that the person with special needs can still apply for

government benefits while also protecting his or her financial interests by

providing an inheritance or gift.

DEVELOP YOUR PLAN CAREFULLY

There is no single trust that will meet everyone’s individual needs. The best trust,

or trusts, is the one that is suited to you and your individual circumstances.

Whether you develop one or more trusts as part of a comprehensive estate plan

is something you need to determine after discussing your situation with yourestate planning attorney. Only then can you decide what types of trusts you will

need to create, and get a better idea of the steps you need to take in order to do

so.




FREE Report You Can Download. Just Click the Image

Do you have an Estate Plan in place? A plan that tells people how you want your

estate managed in the event of a sudden death or if you become incapacitated?

In these tragic events, without an Estate Plan, typically the state will control this

management and generally distribute your assets to your spouse or closest kin. This

may not work as you intended, and you’re letting the court decide how your assets

are divvied.

With a Living Trust in place, you put yourself in control to protect your assets and

distribute your assets as you see fit.

Download our free report today “Living Trusts: Calculating the Benefits” and you can:

Learn how to make probate painless, or avoid it altogether

Find out how Living Trusts can help you better plan for your children- especially those who are

disabled

Provide continuous income for your dependents

Protect your privacy by keeping your Living Trust from public documents

And so much more…

bout Geoffrey Garrett

offrey H. Garrett purchased assets of the law practice of Stanley R. Byrd in 2008. For more than twenty-seven years previous

rsued two challenging careers simultaneously, as an attorney in an active sole practice and a senior pilot for a major airline, w

achieved the rank of B-747 captain in the international operation. He was honored as his airline’s 2005 Captain of the Year in

attle. He has been a frequent speaker on the subject of reorganizing troubled airlines, has written significant papers about ai

de sharing and fleet restructuring in bankruptcy, and is the co-author with Stanley R. Byrd of Estate Planning Basics in Washin

. Garrett advises in matters of estate planning and probate, trust administration, guardianship and planning for special need

er law and asset protection. He assists owners of small businesses with respect to entity formation, administration and

mpliance, purchase and sale of businesses and succession planning.

Byrd Garrett PLLC

2150 N. 107th St., #501

Seattle, WA 98133-9009

Phone: (206) 363-0123

www.byrdgarrett.com

http://www.byrdgarrett.com/estate_planning/living-trusts/

using trusts in your estate plan

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