Estate Planning | Making a Difference One Family at a Time

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trusts, QTIPChoosing the right trust can significantly enhance your estate plan, protect your assets, and ensure your wishes are honored. With various trusts available, understanding each type can help you select the best tool for your specific needs.

Let’s explore some of the most common trusts and how they can benefit you.

Revocable Living Trust

A revocable living trust gives you flexibility and control over your assets during your lifetime. You create this trust and can change or revoke it whenever you want.

Assets placed into a revocable trust avoid probate, meaning your loved ones can access their inheritances without lengthy court involvement. Additionally, if you become incapacitated, a successor trustee can manage your assets seamlessly without court intervention.

Irrevocable Trust

Unlike a revocable trust, an irrevocable trust permanently transfers your assets out of your ownership. Once created, you cannot alter or revoke this trust without beneficiary approval.

While this reduces your control, it offers significant benefits, such as protection from creditors, Medicaid eligibility, and estate tax efficiency.

Special Needs Trust

If you have a loved one with special needs, establishing a special needs trust can preserve their need-based benefits. The trustee could use funds in the trust to enhance the beneficiary’s quality of life, but Medicaid and SSI access would remain intact.

Testamentary Trust

A testamentary trust activates upon your death, established according to the instructions in your will. Since this trust doesn’t exist until you pass away, it’s fully revocable during your lifetime.

These trusts are frequently used to provide for minors or to ensure financial responsibility for younger beneficiaries.

Charitable Trust

If philanthropy is important to you, consider creating a charitable trust. Charitable trusts let you support your favorite causes while providing significant tax advantages.

Two main types are charitable remainder trusts (CRT) and charitable lead trusts (CLT). A CRT pays you or your chosen beneficiaries income first, then donates the remaining assets to charity upon your death.

Conversely, a CLT donates to charity initially, with remaining assets eventually passing to your beneficiaries.

Spendthrift Trust

A spendthrift trust protects your beneficiaries from irresponsible spending and creditor attachments. If you’re concerned that a beneficiary may mismanage their inheritance, this trust lets you appoint a trustee who controls asset distributions.

The trustee will distribute the resources according to the instructions you dictate in the trust declaration.

Qualified Personal Residence Trust (QPRT)

If you own valuable property and wish to reduce estate taxes, a qualified personal residence trust (QPRT) can help. With a QPRT, you transfer your home into the trust but retain the right to live there for a specified period.

After this term ends, the property passes to your beneficiaries at a significantly lower transfer tax valuation, providing substantial tax savings.

Generation-Skipping Trust

To preserve wealth for future generations, consider a generation-skipping trust. This trust allows you to transfer assets directly to grandchildren or even great-grandchildren, bypassing estate taxes that would otherwise apply when wealth passes through each generation.

We Are Here to Help!

As you can see, there are many options. When you work with our firm, we will analyze your situation and your objectives and help you make the right choices.

You can call us right now at 860-548-1000 to schedule a consultation at our Glastonbury or Westport, CT estate planning offices, and you can use our contact form to send us a message.

Brian S. Karpe, Estate Planning Attorney
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