“We may think of a spoiled heiress to a large fortune, whose parents were savvy enough to prevent her from having full access to her funds. On the other hand, we could imagine a loved one with special needs, whose needs will be provided for with trust-protected money.”
Trusts serve many different purposes in estate planning. They all have the intent to protect the assets placed within the trust. The type of trust determines what the protection is, and from whom it is protected.
The person who creates the trust is called a “grantor” or “settlor.” The individuals or organizations receiving the benefit of the property or assets in the trust are the “beneficiaries.” There are two basic types of beneficiaries: present interest beneficiaries and “future interest” beneficiaries. The beneficiary can be both the grantor and the beneficiary when a trust is set up for their lifetime, or it can be other people or entities.
The person who is responsible for the property within the trust is the “trustee.” This person is responsible for managing and investing for the assets in the trust while following the instructions of the trust. The trustee can be the same person as the grantor, as long as a successor is in place when the grantor/initial trustee dies or becomes incapacitated. However, the grantor still controls the trust and has full access to the trust accounts as the principal recipient of the trust.
One way to establish asset protection during the lifetime of the grantor is using an irrevocable trust. Someone other than the grantor must be the trustee, and the grantor should not have any control over the trust assets. The less power a grantor retains, the greater the asset protection.
A grantor can secure lifetime asset protection and also wishes to retain the right to income from the trust property, hold on to the use of the grantor’s residence for one’s self, or provide a protected home for an adult child upon the grantor’s death. Very specific provisions within the trust document can be drafted to accomplish many tasks.
There are many other options that can be created to accomplish the specific goals of the grantor.
Some trusts are used to protect assets from taxes, while others ensure that an individual with special needs will continue to receive needs-tested government benefits and still have access to the trust funds for costs not covered by government benefits.
Grimaldi & Yeung LLP has a thorough understanding of the many different types of trusts and can create a trust that would best suit each individual situation and goal.
Reference: The News Enterprise (July 25, 2020) “Trusts are powerful tools which can come in many forms”
Our firm now offers Care Advocacy to service all of our clients' needs with our new social work staff. Please call our office anytime for assistance in your Estate Planning, Long Term Care Planning, Medicaid or Special Needs Planning: (718) 238-6960 or firstname.lastname@example.org. We will be happy to schedule an appointment with one of our attorneys.