The process of estate planning involves a great deal of decision-making. There are different estate planning devices that can be utilized, and it is important to make the right choices. Many people assume that a will is the ideal estate planning document, but in fact, a trust can be preferable in many instances.
You have to understand the fact that there are different types of trusts. Some trusts are revocable, and there are trusts that cannot be revoked or rescinded.
The best type of trust for you would depend on your unique set of personal circumstances. If you are not concerned about estate taxes or asset protection, you could use a revocable living trust. With this type of trust, you have the right of revocation, so you can change your mind and dissolve the trust if you ever choose to do so.
Plus, you can act as the trustee while you are living, so you would have total control of the trust while it is intact.
After you die, a trustee that you name in the trust declaration would be empowered to distribute assets to the beneficiaries outside of probate, so the distributions would take place in a timely manner.
An irrevocable trust would be useful if you want to separate your personal identity from your assets. When you convey assets into an irrevocable trust, you gain certain benefits.
For example, some people are exposed to the federal estate tax. Anything that you want to transfer to anyone other than your spouse that exceeds $5.43 million in value would potentially be subject to this tax.
We practice law in Connecticut, and there is a state-level estate tax in our state to contend with as well. The Connecticut estate tax exclusion is just $2 million.
Generally speaking, if you convey assets into an irrevocable trust, you would be removing the resources from your taxable estate. There are a number of different irrevocable trusts that are used for tax efficiency purposes.
In addition to the estate tax efficiency facet, there are irrevocable trusts that are used to provide asset protection, and this is important to people who are in certain high-risk professions. We live in a litigious society, and there are those who are always looking for deep pocket targets.
Irrevocable trusts are also used by people who want to obtain Medicaid eligibility. Medicaid is a need-based program, so you cannot qualify if you have significant resources in your own name. This program pays for long-term care, but Medicare does not.
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Our firm can help if you would like to discuss your estate planning objectives with a licensed professional. We offer free consultations, and you can send us a message through this page to set up an appointment: Hartford CT Estate Planning Attorneys.