Last year, we wrote about 3 types of Trusts that could help your loved ones avoid probate. When someone dies without a trust their estate often enters into probate, where a Judge will determine what happens to the belongings and money they left behind. If they create a Will, the Judge will follow the included wishes on what to do. However, court fees, taxes and attorney fees are all payable from the probate estate before any of it is passed along to your loved ones.
Trusts are different, however. Anything you place in a Trust is managed by an independent third party and passed along to your chosen loved ones without the involvement of the court. It is not subject to probate fees or processing times. There are also several planning strategies that you can take advantage of to reduce or even eliminate estate taxes. If you are considering protecting your family with a Trust, here are 4 more types of trusts, or options in your revocable trust, that you may want to consider:
A Marital Trust is one designed to be passed to your spouse if you pass away before them. It gives them assets without subjecting it to the estate tax of the probate process. Marital Trusts are often used to protect a spouse’s immediate livelihood upon your death.
A Bypass Trust is one designed to benefit your spouse without increasing their tax level. Similar to a Marital Trust, a Tax Bypass Trust passes along money from one spouse to another without entering probate. Unlike a Marital Trust, however, the money is not given directly to the other spouse. It stays within the Trust which they can still access, so that their tax bracket does not increase significantly after the death of their spouse.
Qualified Domestic Trust
A Qualified Domestic Trust is one designed to pass along assets from an American citizen to their foreign spouse. It is used to allow non-American spouses to receive the same benefits and support that a same-country-citizen spouse would normally be entitled to.
A Spendthrift Trust is one designed for someone who may not be entirely financially responsible or capable. Instead of gaining access to the entire contents of the Trust all at once, the creator of the Spendthrift Trust decides the intervals when certain amounts will be released. It creates a process similar to an allowance, perfect for children or loved ones that are not great at saving up.
Find the Right Trust For You
There are so many different types of Trusts with different purposes and processes. At the end of the day, however, they all have the same purpose: to avoid probate court and protect your loved ones. For help creating the perfect Trust for you, contact Solan, Park & Robello today! We believe in caring for your future.