Family Trust: A Family trust is a trust created to benefit persons who are related by blood, affinity or law. Generally they are created to protect a beneficiary from taxes, creditors, the government and themselves.
Family Trust: Living or Testamentary
Family Trusts may be created as living trusts or testamentary trusts. A living trust is a trust created by the grantor while the grantor is alive. A testamentary trust is a trust created by the grantor’s will when the grantor’s will is presented to the court for probate (upon the grantor’s death).
Planning Option: Why choose a living family trust v. testamentary family trust?
Because a properly funded family living trust can avoid probate and a testamentary family living trust is subject to probate.
Family Trust: Revocable or Irrevocable
Family Trusts may be revocable or irrevocable. Grantors can create family trusts that are revocable when they are alive (known as revocable or intervivos family trusts). However, when the Grantor dies, that revocable living family trust actually becomes irrevocable (because the Grantor is no longer alive and able to revoke the family trust).
Planning Option: While most grantors want the ability to revoke or amend their family trust during life, sometimes a grantor must use a testamentary family trust for a specific planning purpose (e.g., Medicaid Trust Purposes).
Family Trust: Why
Client’s create family trusts for many different estate planning reasons. Common estate planning reason for creating a family trust have been listed below;
- Create a Minor Children’s Trust (trust for benefit of minor children)
- Create a Trust to protect a special needs beneficiary
- Avoid probate taxes upon death
- Asset Protection; beneficiary’s creditor’s
- Asset Protection; divorcing spouse
- Asset Protection; bankruptcy
- Asset Protection; Medicaid
- Provide for a surviving spouse and children
- Blended Family: avoid disinheritance
- Tax Avoidance
- Privacy
Family Trust: Cost & Estate Planning Fees
Family trusts are not terribly expensive. However they cost more than wills costs. For most people, the costs of not creating a family trust are so excessive that choosing a family trust is an easy decision.
Family Trust: How to get Started
Give us a call. We are happy to discuss whether a family trust is right for you. We are happy to speak with you at no charge.