What Is a Trusts Lawyer?
A trusts lawyer is an attorney who creates a trust on someone's behalf. A trust offers a legal vehicle for transferring property and other assets. For example, you may want to set up a trust to leave possessions and assets to loved ones. A trust can help your loved ones avoid going through the probate process. A trusts lawyer will help set up a trust and file all the required paperwork to put the trust in place.
A trusts lawyer can also offer relevant legal assistance to the trustee, a person an individual designates to manage a trust. You could even name a lawyer as your trustee to help you manage a complex and large estate or ensure your trustee remains an impartial third party.
Do You Need a Trusts Lawyer?
Anyone who wants to establish a trust can benefit from working with a trusts lawyer to create or review the trust document. Common reasons to develop a trust include the following:
- You want to lower your estate taxes.
- You want to help your family and loved ones avoid going through probate.
- You want to retain control over when your beneficiaries get their inheritance.
Trusts are useful when you want to leave your possessions to loved ones, but you don't need to name a guardian for a minor nor specify last wishes. You need to create a will to achieve these goals. Consulting with an experienced trusts lawyer can help you clarify the right legal document for your specific situation.
All in all, creating a trust helps you make sure that your valuables and assets transfer to where you want them to go, either while you are still alive or after your death. Working with a trust lawyer will give you confidence that what you decide will truly be put in place. Even if a dispute arises, trusts should hold up in court.
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Irrevocable vs. Revocable Trusts
Trusts include irrevocable and revocable trusts. Each type comes with advantages and drawbacks. Working with a trusts lawyer is an essential step in deciding the right type of trust to use.
Irrevocable Trusts
When you create an irrevocable trust, you form the trust and then step aside. You cannot take back property or assets you place in the trust, and you cannot manage the assets as the trustee. Once you form and fund the trust and the agreement is signed, you cannot change that agreement.
Individuals employ irrevocable trusts to avoid paying tax on a property when the grantor, the person who creates the trust, dies. Since the grantor permanently gives assets in the trust to a trustee and the beneficiaries of the trust, the grantor no longer owns the assets. The assets don't contribute to the estate's value and are not subject to estate taxes.
Revocable Trusts
You can change a revocable living trust at any time. For example, you can change the trust by using a trust amendment if you reconsider a provision in the terms of the trust, such as changing who you want to be a beneficiary. You could undo, or revoke, the whole trust if you decide the trust no longer serves your purposes. A revocable trust also lets you plan for mental disability since you can have a successor manage the assets held in the trust if you become mentally incapacitated.
While revocable trusts offer significant flexibility, the assets transferred to the trust still are considered your personal property — you retain absolute control over the assets after all. Creditors can still reach the assets, and state and federal estate taxes might come due upon your death since the assets constitute your estate. A revocable trust does not offer any protection if someone sues you, and these trusts get considered for Medicaid planning.
A revocable living trust turns into an irrevocable trust when a grantor dies because the grantor can no longer make any trust changes. However, you can designate a revocable trust to become separate irrevocable trusts upon your death. These irrevocable trusts can benefit your children or other beneficiaries.
Here is an article about the differences between irrevocable and revocable trusts.
Trusts Lawyers and Living Trusts
Many people choose to use living trusts to distribute assets to beneficiaries upon their death. The living trust is the legal entity that owns the property you transfer into it while you are alive. It often makes sense to work with a trusts lawyer to create the trust document to ensure the trust gets created in a way that fulfills your wishes.
Some examples of situations where you will benefit from working with a trusts lawyer to create a living trust include the following:
- When the trust contains conditions: Many grantors choose to put conditions on the trust. Conditions can control when and how assets get distributed. For example, you can include a requirement that stipulates the age each beneficiary inherits portions of the trust, or that a child or grandchild must earn a college degree before receiving the inheritance.
- When you will owe estate tax: If your estate is larger than the federal estate tax exemption, you will owe estate taxes. Many states also have estate taxes. A trusts lawyer can help you review options and cut down on the taxes your estate will owe.
- When you are not sure what to place in a trust and what to put in a will: Trusts and wills offer various benefits and disadvantages. Many people may not be certain they have the right document for their situation. A trusts lawyer can explain the options to help you decide how to proceed.
- When you want to skip generations: If you're planning to give assets to your grandchildren or other relatives a specific number of years younger than you, this arrangement is considered generation-skipping. Depending on the amount you want to transfer, the transfer could invoke the federal tax known as GSTT, the Generation-Skipping Transfer Tax. Working with a trusts lawyer can help you avoid or minimize invoking this high tax while still transferring your assets following your wishes.
- When you have a large amount of life insurance: Since life insurance is subject to estate tax, you may need the help of a trusts lawyer to create a special trust that prevents your funds from being hit by the tax.
- When a beneficiary has special needs or receives government assistance: Specific types of trusts exist to deal with these situations. A family trusts lawyer can help figure out the right type of trust to use. Here is an article about special needs trusts.
- When you need help to transfer your assets: Many people don't know how to transfer assets legally into a trust. A trusts lawyer can ensure you correctly transfer your assets so that the trust can go into effect.
When you plan how you'll pass property and assets to your loved ones, you will face the possibility of making some difficult decisions regarding your possessions. When you work with an experienced trusts lawyer , you can ensure that you set up a legal agreement that fulfills your wishes while you offer protection for your assets and beneficiaries in the process.
