A Guide to the Different Types of Trusts in Gilbert in Arizona
Are you wondering which trust is right for your needs? Click here for a guide to the different types of trusts in Gilbert, Arizona to find out about your options.
Sixty percent of Americans are seriously lacking when it comes to preparing their future plans. Whether you plan to write up a will or place your assets in a trust, it's important to understand your options for leaving anything to the family you leave behind. An Arizona estate planning attorney can help you.
Grantors create trusts to handle their finances for their beneficiaries when they die. Trustees (your lawyer, financial advisor, or trusted family member) make sure that these plans are followed. In some cases, the grantor may continue to be a trustee until their death.
Now, what kinds of trusts are there? Continue reading to learn all about the different types of trusts available for estate planning in Gilbert, AZ. There are many different kinds of trusts and it is important to understand the various types of trusts that are available to you.
A revocable living trust is created to protect your assets and decide who your beneficiaries will be. Revocable living trusts are those that can be altered throughout the grantor's lifetime. They usually become irrevocable after the grantor's death but not necessarily. Sometimes a successor trustee just takes over the trust. To learn more about revocable living trusts click here.
A Totten trust is a revocable trust that is "payable on death". This means that the beneficiary directly receives assets when the grantor dies. Grantors can add or withdraw funds while they are still alive, and they can also change the beneficiary as needed. A successor trustee usually will end the trust and distribute.
A spendthrift trust is ideal for anyone dealing with irresponsible beneficiaries as a means to protect your assets. The assets in a spendthrift trust technically belong to the trust, preventing beneficiaries from having direct access. Estate planning documents designed that way usually provide the maximum asset protection for the beneficiary against creditors. This trust gives the grantor complete control over how their beneficiaries can spend the funds.
It is an important estate planning tool as part of your comprehensive estate plan. It can be done as a revocable trust or an irrevocable trust.
Irrevocable trusts, once set up, are unreachable by the grantor. If you decide to go with an irrevocable trust, you need to be prepared to relinquish control over these assets. Transferring assets in the trust will protect the assets from creditors.
These trusts can reduce the value of your estate while ensuring that your heirs will still receive these assets when you die. Once they've been created, they usually cannot be changed or revoked. There are exceptions though and trust decanting is becoming more popular.
Marital "A" Trusts
A Marital "A" Trust is established by a grantor to protect their spouse when they die. The trust transfers the assets to the spouse and protects them from paying estate taxes for the rest of their lives. Heirs must then pay estate taxes when their surviving parent dies. It is not a very common trust in Arizona estate planning tools as estate taxes at the moment have a high threshold.
Bypass "B" Trusts
The Bypass "B" Trust allows married couples to lessen the impact of estate taxes on their heirs.
When one of the spouses dies, the surviving spouse receives the assets from their spouse's estate. However, the assets aren't added to their estate. The assets stay in the trust until their death when the beneficiaries receive their rightful assets.
A last will and testament will set up a Testamentary Trust. A testamentary trust isn't created until the grantor dies because it's outlined in the will. It guarantees that beneficiaries can only access the assets within the trust after the grantor dies. Testamentary trusts are not common in Arizona, we see them more when reviewing some out-of-state legal document.
Testamentary trusts may still face probate court and they have to go through the probate process, which can be expensive. Unfortunately, creating a trust after death can be complicated. Trusts attorney usually try to avoid probate and avoid testamentary trusts.
Generation Skipping Trusts
Generation-skipping trusts allow grantors to choose their grandchildren as their heirs in their estate plans. The skipped generation never has access to the trust, but it protects them from paying estate taxes. There is also an option for the skipped generation to receive an income generated from the assets. There are other additional benefits. It is a great way to protect assets and your safety net or irresponsible children.
Charitable trusts help the grantor to leave behind a legacy of giving by helping you to leave some of your assets to a charity of your choosing. A charitable lead trust allows you to give specific assets to your chosen charity. A charitable remainder trust allows you to receive an income from assets for a predetermined amount of time before donating the rest to the charity.
Special Needs Trusts
Special Needs Trusts allow grantors to give financial support to their special needs dependents (children, parents, or spouses) without affecting their eligibility for disability benefits. A special needs trust allows you to pay for medical expenses not covered by insurance and other day-to-day expenses. If you have a special needs child it is very important to work with an experienced estate planning attorney as not all AZ lawyers have experience with this type of trust in Gilbert, AZ.
Asset Protection Trusts
Asset protection trusts are irrevocable trusts meant to protect your assets from creditors and other threats to your estate. You have to create this sort of trust before the creditor or threat becomes a problem. Foreign APTs are usually held in offshore accounts making them virtually unreachable.
Life Insurance Trusts
A life insurance trust might be ideal for those who have a large life insurance policy. When you die, the payout from your life insurance policy will go directly into the trust. The funds in this type of trust are non-taxable.
Qualified Terminable Interest Property Trusts
The Qualified Terminable Interest Property trust is set up to support your spouse if you die first. This type of trust is common when the grantor has children from a previous marriage. The trust uses the income generated from the trust to provide your spouse with financial support for the rest of their life.
When your spouse dies, the beneficiaries will receive what's left of the trust. This can be the children from the first marriage, children from the current marriage, or someone else entirely.
What Types of Trusts Do You Need?
Now that you understand the different types of trusts that are out there, you can take the steps you need to get your affairs in order. Getting a trust can be easy when you have an estate planning lawyer on your side. Knowing the arizona trust law rights of beneficiaries can also help you make your decision in what trust you would like to set up.
Contact Citadel Law Firm today to get more information on the trust options and types of trust agreements available to you in Gilbert and Chandler, Arizona, based on your current life and financial situation.
Call (480) 565-8020 or click here to schedule your free consultation with an experienced estate planning attorney today. We are transparent about our estate planning attorney's fees and revocable living trust fees.
Trusts in Arizona are a great way to structure your estate plan, avoiding probate, without giving away full control of your assets. That is specially true if you have complex issues with several factors to take into consideration. Creating a Arizona trust is not time consuming, our law firm will be pleased to help you.