If you are in the process of creating an estate plan, or you intend to create your plan in the near future, it is important to be familiar with the various estate planning tools and strategies available to help further your plan goals. A revocable living trust is one of the most commonly used estate planning tools. To help you decide if a trust would be a beneficial addition to your estate plan, the trust attorneys at Morris Hall PLLC explain the top uses for a trust.
At its most basic, a trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Trustor, also referred to as a Grantor or Settlor, who transfers property to a Trustee. The Trustee holds and oversees the management of that property for the trust's beneficiaries.
Top 5 Uses for a Trust
Though once used almost exclusively by wealthy families as an efficient way to protect and pass down the family wealth, trusts are now frequently found in the average person’s estate plan. To help you decide if a trust would be a beneficial addition to your estate plan, here are some of the top uses for a trust.
- Avoiding probate. Probate is the legal process that is typically required after your death to ensure that all estate assets are identified, valued, and eventually passed down to the intended beneficiaries in accordance with your will or statutory provisions. Probate requires court involvement and can be a frustrating process. Unlike assets passing through a will or through intestate succession, assets held in a trust are considered “non-probate” assets, which means they can be distributed outside of probate.
- Incapacity planning. When you think of estate planning, you likely focus on planning for your eventual death; however, a comprehensive estate plan also plans for the possibility of your own incapacity. A revocable living trust is frequently the tool of choice for incapacity planning. When you create the trust, you name yourself as the Trustee, and the person you choose to take over control of your assets in the event of your incapacity as the Successor Trustee. As the Trustee, you continue to manage the trust assets just as you did before they became trust assets. If incapacity strikes at any time, your designated successor Trustee becomes the Trustee, thereby shifting control of the trust assets without the need for additional action or court interference.
- Asset protection. An irrevocable trust is often used as an asset protection tool to protect assets from creditors, divorce, and even spendthrift beneficiaries. Because the trust is irrevocable, it is difficult for creditors to reach the trust assets. A Medicaid trust is a special type of irrevocable trust that is also commonly used to protect estate assets if you need to qualify for Medicaid benefits to help with the high cost of long-term care at some point.
Contact Arizona Trust Attorneys
We have only touched upon some of the top uses for a trust. If you have additional questions or concerns about trusts, contact the experienced Arizona trust attorneys at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.