Avoiding Probate and Taxes With Trusts
Trusts can be used to avoid probate, creditors, and estate taxes as well as protect beneficiaries. By placing your assets in Trust or creating stipulations in your Will that form a Trust upon your death, you can save your heirs from hassle and headache. While there are numerous types of Trusts, there are four that are the most commonly used by Anderson & Labovitz clients.
A Revocable Trust, also known as a living trust, is one that you create while you are alive. This trust gives you the ability to modify it at any time or revoke it completely if you wish. Through the use of this type of Trust, you can maximize your ability to avoid the lengthy and complicated probate process while ensuring your Estate Plan goals are accomplished. Although a Revocable Trust will avoid probate, the assets therein may still be subject to creditors and inheritance taxes. Therefore, this type of Trust is not suitable for everyone, but it does have its place for some of our clients in accomplishing their plan desires.
In addition to the above benefits of avoiding probate, an Irrevocable Trust can provide the additional benefits of protection from creditors and can result in complete avoidance of inheritance taxes as well as protection from Pennsylvania regarding its Medicaid look-back. However, this type of Trust cannot be changed or revoked by you. As a result, this, again, is a type of Trust not suitable for everyone. However, many of our clients are able to see a benefit for their family from implementing an Irrevocable Trust.
A Testamentary Trust is created in a will and does not get funded until the passing of the testator. This type of Trust is an excellent tool for those who expect to leave assets to minors. Failure to incorporate this simple type of a Trust in your will could result in unnecessary Court proceedings where the Court ultimately helps set up a trust for you minor beneficiary.
Supplemental Needs Trusts and Special Needs Trusts
Special Needs Trusts are created to protect a person who receives Social Security Income (Social Security Disability or Supplemental Income) and who may be subject to personal income limits in order to continue receiving these public benefits. We can work to help ensure there is money to provide for a beneficiary on government assistance while not affecting these public benefits.
You can count on us to work closely with you to assess your family’s situation and needs and incorporate the appropriate trusts into your Estate Plan. Call us now at 412-209-3200 or send us an email at aanderson@PaLawFirm.com or at jash@PaLawFirm.com to schedule a free, no-obligation conference to assess your needs.