Beyond the Standard Revocable Living Trust

A complete estate plan starts with a standard revocable living trust.  A revocable trust is one that can be altered or canceled by the creator of the trust, known as a Trustor. Standard revocable living trusts help manage and protect the assets of the creator in anticipation of either incapacity, such as Alzheimer’s, or death. Due to this flexibility, revocable trusts are the most common type of established trust in the country and act as a necessary safeguard for the Trustor. 

Though convenient in many regards, standard revocable trusts require time and effort to set up and should be reviewed every three years. To avoid probate, the Trustor’s assets must be retitled in the name of the trust and the overall estate plan should be monitored to ensure objectives are being met. 

There are estates that extend past the basics of a standard revocable living trust and require advanced protection to ensure everything is properly accounted for. The unique estate planning needs of each individual merit careful consideration which is why it is recommended to work through the process with a qualified estate planning attorney. However, a basic working knowledge of what resources are available in a more advanced estate plan can be very helpful. Here are a few to consider: 

Qualified Personal Residence Trusts

A Qualified Personal Residence Trust (QPRT) allows its creator to remove her personal home from her estate for the purpose of reducing potential gift and estate taxes when transferring assets to the beneficiary of the estate. This type of trust is irrevocable, meaning its terms, the trust language, cannot be modified. If you have a home that you would like to pass on to your heirs while minimizing estate taxes (particularly if the property is of high value), a QPRT may be a good option. 

Special Needs Trusts

A special needs trust, also known as a supplemental needs trust, allows a disabled beneficiary to enjoy the use of inherited property (any asset) while retaining an ability to receive essential needs-based government benefits. These trusts can provide benefits to and protect the assets of minors and the physically or mentally challenged. This type of trust is also irrevocable. 

Irrevocable Life Insurance Trusts

An Irrevocable Life Insurance Trust (ILIT) is one of several ways to eliminate the proceeds from a life insurance policy upon your death from your taxable estate. An ILIT is a good idea if you have a significant amount of wealth and assets that need protection.  An ILIT can also be a good vehicle if you have an illiquid estate, such as large holdings in real estate.

Limited Liability Companies

A limited liability company (LLC) is a business structure that limits the liability of the owner of the LLC.  Many businesses, of any size, utilize this structure so that personal assets are not subject to a bad event in the company.  As it ties to your estate plan, it is important to remember that the ownership interest is considered an asset and that it needs to be managed and passed on. Depending on the ownership structure of the LLC, in many instances, the ownership can be incorporated into a revocable living trust and controlled by the trustee of the trust.

Family Limited Partnerships

Family Limited Partnerships (FLPs) are an increasingly popular option for protecting wealth, real estate holdings, or businesses among multiple family members. When the partnership agreement is properly written, an FLP provides a host of benefits, including:

• Protection of assets from marital property division, creditors, and legal judgments
• Significant tax savings resulting from valuation discounts
• Simplification of distributions to succeeding generations
• Increased economy in administration of assets through proper consolidation
• Protection against forced liquidation of assets

Seek the Help of a Trusted Expert

When it comes to your estate there are many moving pieces that need to be tethered to a single, stable plan. For over 50 years, Morris Hall, PLLC has been assisting families in their pursuits to secure their estates and their futures, achieving peace of mind in the process. If you have any questions about your estate plan, don’t hesitate to contact us.