Most people understand they should have a will, but many do not recognize the value of trusts. While some people believe trusts are only for the wealthy, a trust can be an excellent estate planning tool for anyone hoping to avoid probate when passing their assets on to their heirs. A trust is often the best way to ensure a vulnerable loved one or pet has financial support after your death.
Multiple kinds of trusts exist to help grantors achieve specific intentions, including protecting your assets. A Virginia Beach trusts lawyer can discuss your goals and help you decide whether a trust is right for you. A knowledgeable attorney can guide you through this process.
How Does a Trust Work?
A trust is a legal container for assets that someone, called a grantor, wishes to leave to their heirs. A lawyer in Virginia Beach drafts documents explaining what the grantor intends for the trust, and the grantor titles the assets in the name of the trust. Upon the grantor’s death, the property they put into the trust passes directly to the people they named as beneficiaries.
You can establish a trust to avoid probate, reduce the value of an estate to avoid inheritance tax, or ensure disabled loved ones have access to funds without endangering their eligibility for government benefits. You can also establish a trust to manage your assets if you become incapacitated, to make a charitable gift upon your death, or to leave funds to support a beloved pet.
Keeping property in a trust is more private than holding it in your name and allows you to pass your assets to your heirs without public disclosure. A will, on the other hand, is required to go through the probate process, and so its contents must become public.
Trustees
Every trust must have a trustee. In some cases, the trustee and the grantor are the same person; in other cases, the grantor appoints someone to serve as trustee. The trustee must manage the trust according to the grantor’s wishes as described in the trust documents. The trustee is a fiduciary and has a legal duty to manage the assets in the trust for the benefit of its beneficiaries—with legal consequences should they engage in financial misconduct or mismanagement of trust assets.
Revocable Living Trusts
A revocable living trust allows the grantor to continue to manage the assets in the trust by naming themselves the trustee. A Virginia Beach attorney can explain the risks and benefits of being the sole trustee versus naming another person as trustee.
The law allows you to dissolve a revocable living trust, change its terms, or add or remove property from it at any time before your death. When you die, assets in the trust pass directly to your beneficiaries without going through probate. Putting assets in a trust could help beneficiaries needing immediate access to cash or property after your death.
Since revocable living trusts are typically tax neutral and Virginia Code § 64.2-747 allows a grantor’s creditors to attach the contents of a revocable trust, grantors hoping to achieve significant tax benefits or protection from creditors should consider an irrevocable trust instead.
Irrevocable Trusts
Irrevocable trusts can provide tax benefits because the trust, not the individual, owns the assets. If your estate is large enough that it might be subject to federal inheritance taxes, putting assets in an irrevocable trust could reduce the value of the taxable estate and reduce—or eliminate—the need for your heirs to pay tax on their inheritance.
An irrevocable trust also shields assets from creditors. Once property is in an irrevocable trust, you have no ownership interest or control over it, so your creditors have no right to it. Your property is also protected from the creditors of your beneficiaries until they receive the property.
Once you create and fund an irrevocable trust, you cannot change it. Nor can a grantor be a trustee of an irrevocable trust. You should discuss the implications of an irrevocable trust with a seasoned Virginia Beach attorney.
Consult a Virginia Beach Trusts Attorney About Available Options
Trusts are useful tools in estate planning, even for families without considerable wealth. For families with substantial assets, they are essential. A skilled Virginia trusts attorney can create a trust that meets your goals and carries out your intentions. Find out more by speaking with a knowledgeable attorney today.
