Louisville Trusts Attorney Overview

In addition to having a will, many people find that creating a trust is one of the best ways to plan for the future distribution of assets. Many different types of trusts exist, but the general purpose of each is to set aside specified assets for another’s benefit. Trusts can be intimidating because there are a variety of things you can specify in them. But the benefits of having a trust make the effort to create one worthwhile.

What is a Trust?

A trust is a type of estate planning arrangement involving three parties: the grantor (the person creating the trust), the trustee (the person who controls the trust), and the beneficiary (the person who will eventually receive the assets in the trust). When a trust is created, the grantor places their assets (real estate, bank accounts, etc.) into the trust and designates a trustee. The trustee will manage the trust and distribute the assets to the beneficiary in accordance with the grantor’s wishes.

Why You Consider Creating a Trust

You might think you don’t need trust if you already have a will. When it comes to estate planning, a trust can be one of your most powerful tools for several reasons.

1. Your Estate Can Bypass Probate.

One of the greatest advantages of having a trust is that the assets you put into it will not be subject to the probate process. When your estate goes through probate, everything gets delayed, and it can cost money. This process can also add unnecessary stress to an already emotional situation.

2. You Can Be More Specific with Asset Distribution.

Unlike with a will, where you can simply designate who gets what, you can be much more specific with your wishes when using a trust. For example, you might have significant assets that you worry a loved one wouldn’t use wisely if they received the money all at once. You can put various provisions in a trust, such as paying out a portion of the money when a child reaches a certain age or designating money for specific purposes like college or living expenses.

3. You Can Have More Privacy.

If you want to avoid others knowing how much your estate is worth or hope to avoid conflict among your beneficiaries, a trust is an excellent option. When you create a will, it eventually becomes public record, but a trust remains private.

4. You May Get Some Tax Breaks.

If you have a high-asset estate, you may be concerned about the tax consequences of your decisions. In some cases, creating a trust can be a great strategy to mitigate your overall tax obligation.

Different Types of Trusts

Many different types of trusts can be used to accomplish different goals. For example, some trusts are designed more for asset protection, while others are meant to take care of loved ones with special needs or fund charitable causes. Here are some of the most commonly used types of trusts:

• Revocable Trusts — The grantor sets up the trust and is able to make any changes they wish while they are still alive.
• Irrevocable Trusts — This is a trust that cannot be changed once it’s created and the assets are placed in it.
• Living Trusts — This is a trust that allows the grantor to continue using their assets during their lifetime and transfer them as designated in the trust after their death.
• Testamentary Trusts — A testamentary trust only becomes effective upon the grantor’s death and is a type of trust that does not avoid probate.
• Special Needs Trusts — This type of trust is often used to provide for an adult who is receiving public benefits so their inheritance doesn’t disqualify them from those benefits in the future.
• Charitable Trusts — This type of trust holds assets for the benefit of a particular charity.

The most common type of trust for estate planning purposes is the revocable living trust. It’s a flexible strategy that allows you to make changes over the years (or delete the trust) as your circumstances shift.

Why You Need a Lawyer When Creating a Trust

Trusts are useful but highly complex estate planning tools. Attempting to create a trust on your own could result in unintended mistakes with costly consequences. An experienced estate planning lawyer in Kentucky can review your financial situation, outline your options for a trust, and create an estate plan that will best fit your needs. Your attorney can also make any modifications to your revocable trust as your circumstances change over the years.

Louisville Estate Planning Attorney is dedicated to providing people who are interested in securing their financial future with the information they need to make sound decisions. We can connect you with a Kentucky estate planning attorney that will offer knowledgeable guidance on wills, trusts, and other estate planning strategies.