Irrevocable trusts, which are virtually unchangeable once established, have decreased in use, but revocable trusts, over which the grantor retains control, still flourish.
A Cincinnati.com article, titled “Trusts remain useful tool in estate planning,” addressed some confusion over the use of trusts in light of recent changes in the law.
One very popular estate planning tool, the revocable trust, remains very much the foundation for many estate plans and is used frequently. In this arrangement, the maker of the trust (the person planning his or her estate) retains total control over the assets, but bypasses probate should the trust maker become incapacitated or die.
Trusts can be funded with a wide variety of assets, too. For example, securities, life-insurance proceeds, and real estate, as well as tangible personal property, are commonly used to fund trusts.
A common use of a trust is to provide income and bequests for the trust maker’s surviving loved ones in a way that recognizes differences among the heirs when they succeed the trust maker as the trust beneficiaries. For instance, the trust could first provide just for the surviving spouse until he or she passes away, then for the children and perhaps the grandchildren. Alternatively, the trust could provide for the spouse and children at the same time. As for the children, a trust can be structured based on the children’s needs. The needs may provide that funds be paid out at specific ages or at a certain time, like when college tuition is due or the birth of a child. Sometimes it is prudent to give sole discretion to the trustee as to when to make payments to the beneficiaries. Guidelines for discretionary payments can be detailed in the trust document.
Another reason trusts are used is asset protection. The trustee is the legal owner of the trust property and the beneficiaries are only beneficial owners. When the beneficiaries (other than the grantor of a revocable trust) have no right to demand the property, then the creditors of the beneficiaries can’t get to the assets.
Questions about trusts?
Don’t just use a book of forms and boilerplate documents, and don’t try to find a reliable answer on the Internet. What you should do is find a local, experienced estate planning lawyer for specific legal advice. It’s worth the time, cost, and peace of mind.
Reference: Cincinnati.com (November 21, 2014) “Trusts remain useful tool in estate planning”