Many of Schulz Reagan, LLC’s clients are interested in using trusts to control the distribution of their assets outside of the probate process. There are a large variety of trusts, all of which can be customized to your unique needs.
A revocable trust is a trust for which you retain the ability to revoke or cancel after it is formed. An irrevocable trust may not be revoked after it is formed. Assets transferred into revocable trusts are generally treated as though the property continues to belong to you individually. Most revocable trusts are drafted so that upon your death they become irrevocable. Property owned by a revocable trust that becomes irrevocable on your death does not go through the probate process. Trust property is used for the purposes designated in the trust until such time as the terms of the trust dictate that the property should be distributed to your chosen devisees.
Property owned by a properly formed irrevocable trust is no longer treated as though it is your individual property, whether for tax purposes or for otherwise. Transferring property into an irrevocable trust is not a decision to be made lightly, as once property is placed into an irrevocable trust it cannot be returned to you. Nonetheless, an irrevocable trust can be drafted in such a way that you remain the trustee during your lifetime with the ability to use certain trust assets for designated purposes during your life.
At Schulz Reagan, LLC we frequently recommend the use of a type of will that “pours” your assets into a trust upon your death. The trust is drafted to work in concert with the pour-over will. Any assets transferred into the name of the trust before your death would avoid probate, and any remaining assets would be subject to a simplified version of probate given that the only beneficiary is a trust. Once the trust is funded through probate, the trust instrument would control how the trust assets are used and distributed.
Trusts can be used to mitigate certain tax liabilities. They can be used to protect your minor heirs from receiving assets when they are too young to manage the assets themselves, all while ensuring that someone you trust is able to manage the assets until such time as your heirs are ready to receive them. Trusts can be structured so that real estate can be used by a spouse during their lifetime, without passing title to the property directly to your spouse in a way that would enable your spouse to disinherit your children after you die. They can be used to make sure your heirs do not use their inherited assets for financially imprudent purposes.
Trusts are so powerful, and so flexible, that is impossible to accurately summarize their attributes briefly. If a particular trust instrument makes sense for you and your family given your circumstances, the attorneys at Schulz Reagan, LLC will be sure to discuss those options with you.
Disclaimer: This summary is not intended to be comprehensive, and should not be construed as legal advice for your particular situation. Nothing in this website is intended to substitute for legal representation.