by Bill Miller | Aug 10, 2018 | Estate Planning, trust
David and Amy knew they needed a Will. At least, that’s what they thought. They made an appointment with an Alabama estate planning lawyer to discuss their Wills. Their attorney told them all about trust-based estate plans. David and Amy were surprised to learn that there were other options that better fit their lifestyles.
A Complete Estate Plan Revisited
More than a Will is involved when someone creates an estate plan. Typically, a general durable power of attorney and some form of advanced health care directive are signed along with a Will. And then there are trusts.
For some, a trust should make up the foundation of their estate plan. A Will is still necessary. However, the Will and trust work together and work for the testator.
Advantages to Trust-Based Estate Plans
All trusts involve the following parties:
- The Settlor or Grantor (sometimes more than one),
- At least one Trustee, and
- One or more beneficiaries.
The settlor sometimes also serves as trustee and is a beneficiary. It depends on the type of trust. There are various types of trust that each have a different purpose.
An estate plan that is based on a trust and not a Will offers some useful benefits:
- Avoiding Probate. A will-based estate passes through the probate court. Trusts typically do not. Instead, trust assets may pass directly to the beneficiaries upon the death of the settlor. This, again, depends on the type of trust and the terms contained in the trust document.
- Lowering Taxes. Some estates allow property transfers with little to no tax consequences. This tactic is especially helpful to larger estates.
- Asset Protection. Wills do not protect assets, particularly during the testator’s lifetime. A well-crafted trust-based estate plan, however, can safeguard assets both before and after the settlor’s death. Many asset protection trusts are irrevocable, which makes the trust impossible or at least very difficult to change.
- Protects Personal Information. Wills become part of public court records during probate. Trusts usually do not. A trust-based plan helps protect your personal information and that of your heirs.
Everyone still needs to have a Will. However, it does not have to be the foundation of your estate plan.
Talk to Your Attorney About Trusts.
Schedule a consultation with one of the attorneys at Adams & Miller, PC. You may be pleasantly surprised to discover the options available for your estate plan. Our phone number is 256-251-2137, or you may want to use the Contact Form on our website. We also offer free guides and videos about estate planning and trusts.
We have offices in in Anniston and Birmingham and assist clients in communities like Hoover, Vestavia Hills, Irondale, and Calera.
by Bill Miller | Jul 20, 2018 | Estate Planning, trust
Frank had heard about trusts and though he might want to set one up. Researching trusts online just confused him. There were so many types of trusts. However, he did learn enough about living trusts and testamentary trusts to know he wanted to learn more. Frank made an appointment with his attorney to see which one might be right for him.
What’s the Difference?
It comes down to when the trust is actually established.
A testamentary trust is established by an individual’s Last Will and Testament (the Will). The person who signed the Will, the testator, does not create and fund the trust during his or her lifetime. Instead, the trust is set up when the testator’s Will is probated.
The term “living trust” says it all. Also called an inter vivos trust, a living trust is established while the grantor is still alive.
Testamentary Trust Details
This type of trust offers most of the same advantages of any trust. For example, many trusts are used for asset protection. A testamentary trust can be set up to protect an estate from its heirs’ frivolous financial behavior. Giving some beneficiaries a large lump sum inheritance is a recipe for disaster.
More than one testamentary trust can be set up through a Will. For example, Frank might want to set up one trust for his son and one for his daughter.
The trustee of a testamentary trust acts like any other trustee. In other words, the trustee manages the trust assets. Heirs are not always ready to manage assets passed down through a Will. The trustee can distribute trust assets according to the terms of the trust, but also keep an eye on the beneficiaries.
Beneficiaries may enjoy some important tax advantages by receiving their inheritance through a testamentary trust instead of a lump sum. Distributions may be spread out to minimize the tax burden.
Still Have Questions About Using a Testamentary Trust?
Frank decided that a testamentary trust was right for his estate based on his attorney’s advice. If you are interested in establishing a trust, contact a qualified Alabama estate planning attorney today.
The attorneys at Miller Estate and Elder Law assist their clients with all phases of estate planning. For a free consultation, contact us at 256-251-2137 or use our convenient Contact Form. Although we’re located in Anniston, we also help clients in the Birmingham, Gadsden, Hoover, Talladega, Vestavia Hills, and surrounding areas.
by Bill Miller | Jun 25, 2018 | Estate Planning, trust
People really get a lot done with power tools. Sometimes we all just need little extra oomph. It’s like that in estate planning. Some people need a powerful estate planning tool – a trust. Do you need one in your estate plan?
Trusts 101
A trust is a legal entity created and funded by a settlor or trustor. The trust is administered by a trustee for the benefit of the trust’s beneficiaries.
Why Use a Trust?
Trusts can be revocable (you can change it) or irrevocable (changing is hard or impossible). Both are a powerful estate planning tool. Almost any property you own can be used to fund a trust.
Trusts allow assets to be transferred before and after your death. Some trusts are funded by the settlor. Other trusts are funded by the settlor’s Will.
People use trusts to avoid probate. Trust assets typically do not become part of a person’s estate, and so can avoid probate. Assets usually can be delivered more quickly to beneficiaries through a trust.
Trust can exist for generations. For wealthier families, this allows them to spread their wealth over the years, usually taking advantage of tax breaks.
A Trust for Everyone (Almost)
People who do need a trust have several types of trusts to choose from:
- Revocable Living Trusts are the most common trust. Settlors sometimes names themselves as trustee because they get to maintain control of the assets transferred to the trust.
- A Special Needs Trust, as the name states, is for people with special needs. Example: a 16-year old girl with cerebral palsy may need medical and vocation care for years. Her parents may set up a special needs trust to meet her needs for years to come.
- Miller Trusts, also known as Qualifying Income Trusts, are used by Medicaid recipients. Any income they receive in excess of Medicaid’s income limits is transferred to a Miller trust.
- Spendthrift trusts are often used to protect assets from beneficiaries who are vulnerable to creditors or civil judgments. This trust may also be used to protect an inheritance from an irresponsible heir.
- Charitable Remainder Trusts allow the settlor to donate money to a charity while receiving an annuity. The money used to fund the trust pays the settlor’s annuity until death or until the trust terminates. At that time, the remainder of the money goes to the named charity.
- Dynasty Trusts are used to pass wealth through generations while avoiding or reducing taxes
As you can see, trusts can serve many purposes depending on the settlor’s goals and can be a powerful estate planning tool. However, trusts can have negative consequences for settlors if not set up correctly. It’s best to consult with an experienced attorney before establishing a trust.
Learn More About Trusts.
The attorneys at Adams & Miller understand the estate planning needs of their clients. Contact Adams & Miller, P.C. at 256-251-2137 to schedule an appointment. Though our offices are in Anniston and Birmingham, we help clients in Talladega, Gadsden and surrounding communities.
by Bill Miller | Jun 16, 2018 | Estate Planning, Special Needs, trust
As the caregiver of someone with special needs, you’re called upon to make important decisions on a daily basis. Those decisions may be life-changing for you and for your loved one. Often, therapists, medical specialists, and other advisers help plan the best care for individuals who require extra care. It’s also important to talk to an attorney who understands the needs of disabled individuals. It may be time to establish a special needs trust to provide funds for immediate and long-term care.
Is a Special Needs Trust Different from Regular Trusts?
A trust generally involves three parties:
- the trustor who signs a trust document to create the trust;
- the trustee who manages the trust assets and distributions to beneficiaries; and
- the beneficiary who receives distributions from the trust.
In some trusts, one person may serve all three roles. However, a special needs trust is for a beneficiary with conditions that require a high level of care. The trust, then, may be structured to allow the beneficiary to be eligible for public benefits, like Medicaid.
Who Can Benefit from a Special Needs Trust?
Special needs trusts may provide significant assistance for the following types of beneficiaries:
- People under age 65 who may need government benefits like Medicaid or SSI in the future.
- Individuals who suffer from one or more conditions that limit independence or require long-term or substantial treatment.
- Someone who will need assistance when you are no longer able to assist.
What Can We Pay with a Special Needs Trust?
Trustee of special needs trusts must spend trust funds for the benefit of the beneficiary. Trustees should know what state and federal law allow. Consulting an attorney is a good way to get started. In fact, the attorney who drew up the trust or who is representing the trust, may be able to give you more information the trust. Trust documents provide guidance to trustees, as well as the attorney representing the trust.
How Will I Know if I Need a Special Needs Trust?
Keep the following things in mind:
- A special needs trust may provide additional financial security to you and your loved one.
- Anyone drafting a special needs trust needs to understand the needs of the disabled person.
- Special needs trust can negatively affect eligibility for programs like Supplemental Social Security Income (SSI) or Medicaid if not properly written.
Have Questions? We Can Help.
Schedule a free consultation with the attorneys at Miller Estate and Elder Law Our attorneys know how to help people like you. Just give us a call at 256-251-2137 or use our Contact Form to set up an appointment. Serving clients in the greater Anniston area, including Birmingham, Talladega, and Gadsden.
