Trusts are a legal tool often used to pass wealth to a spouse or to the next generation, usually with rules attached. A trust is a formal legal relationship where a property owner (the Settlor or Grantor) conveys legal title to a third party (the Trustee) who then holds or uses trust property for the benefit of a person (the Beneficiary). Most trusts are written, but a trust can be established orally or can arise by operation of law.
Not everyone needs a trust, but they can be game changers when used for the right reasons. Here are a few reasons to consider using a trust: (1) controlling how your property is used by beneficiaries; (2) privacy and avoiding probate; (3) tax planning or public benefits planning; (4) disability and special needs planning; and (5) creditor protection. Trusts can also be used to avoid ancillary probate estates if you own real property in another State.
If you decide to use a trust, be certain you understand what your trust is supposed to accomplish. Knowing the purpose of the trust will help you communicate your goals with others and will give your lawyer the ability to determine whether you really need a trust, or whether some other, less complicated, legal tool would be a better fit. If the right tool for the job is a trust, then decisions need to be made regarding whether to establish it during your lifetime (a Living or inter vivos trust), or at death (a testamentary trust). Should the trust be revocable or irrevocable? Should all of your property be placed in the trust, or should you funds it with a portion of your estate? Who will serve as trustee? What rules should be included in your trust agreement regarding how trust property is used? If someone tries to sell you a trust without helping you answer these questions, then you’ve found a hammer salesman – someone who thinks every problem looks like a nail.
Introduction to Trusts for Elders and Special Needs Beneficiaries
- Introduction to Trusts
- Why Protect Assets?
- What is Supplemental Security Income?
- What is Medicaid?
- Why use a Special Needs Trust?
- What can a Special Needs Trust pay for?
Trust Formation and Structure
- Creating the Trust
- Trust Instrument and Essential Terms
- The Trustee
- Beneficiaries (of Trusts)
- Purpose (of the Trust)
- Revocation, Modification, Termination
- Spendthrift Provisions
- Discretion and Distribution Standards
- Construction (Construing the Trust)
Funding the Trust
Trust Administration
- Administration, generally
- Administration and Investments
- Investment Decision-making process
- Income and Principal
- Compensation
- Accountings
- Bond
- Declaratory Judgment
- Distributions, generally
- Trust Ownership of a home
- Distributions to family members
Medicaid Trust Rules
- Trust Rules, generally
- Self-Settled Trusts, generally
- Third Party Trusts, generally
- Income Only Trusts
- Special Needs Trusts
- Pooled Trusts
- Sole Benefit Trusts
- Funding Issues Associated with Special Needs Trusts
- Distributions from Special Needs Trusts
- SNT Accounting
Eligibility for Veteran’s Aid and Attendance
- VA Aid and Attendance, generally
- Treatment of Trusts
- Revocable Trusts
- Irrevocable Trusts
Tax Issues
Resources:
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Due Process Limits State’s Power to Tax Out of State Trust
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Sample Trust Language Appointing Trustee
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How much protection does a Medicaid Asset Protection Trust really provide?
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Estate and Gift Tax Exclusion Amounts
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