Trusts: protection, control, efficiency.
Using trusts can be one of the most powerful ways to protect yourself, your heirs, and your legacy. Read on below to learn more.
St. Charles Trusts Lawyer
Drafting a will can be a straightforward way of establishing your final wishes after you pass away, but it is not ideal for all situations and types of property. If you want to avoid putting your family through the probate process, plan for taxes or asset protection, or have more control over what happens to certain property, it may be a good idea to set up a trust in addition or as an alternative to a will. As a note of caution, however: a trust works a lot like a bucket. You’ve got to remember to fill it, or it won’t have any use!
Types of trusts available under Missouri law.
There are two major types of trust under Missouri law: testamentary and “living.” If a trust is funded (or filled with assets) during the life of the trust-maker (often referred to as a “settlor” or “grantor”), it is considered a “living” or “lifetime” trust. By contrast, a trust created at the death of the grantor by the will is referred to as a “testamentary” trust. Testamentary trusts are less common but are sometimes used in Medicaid and special needs planning because testamentary trusts are not included in a person’s estate for purposes of determining benefit eligibility. While a living trust typically allows a person’s estate to entirely avoid the probate process, testamentary trusts only come into existence when a will is probated in court.
Revocable and irrevocable trusts.
Trusts can also be either revocable or irrevocable. Revocable trusts are usually completely changeable by the grantor at any time and for any reason. They can add or remove terms, name a new trustee, change the beneficiaries, or undo the trust entirely.
An irrevocable trust, by contrast, is not subject to being changed or revoked by the grantor. Even irrevocable trusts, however, can be changed or revoked by a “trust protector“: a third party person appointed by the trust documents or by a judge to exercise the level of control over the trust laid out in the trust documents. This person might be a trusted friend, a corporate fiduciary, your financial advisor, or even your drafting attorney. Additionally, statutory “swap powers” and broad trustee powers can allow for distributions out of an irrevocable trust.
Each type of trust enjoys various advantages and disadvantages. For example, assets in irrevocable trusts are usually not considered part of a settlor’s taxable estate and therefore can be designed to minimize estate taxes and provide asset protection in the event of divorce, a creditor attack, or bankruptcy.
Types of trusts available under Missouri law.
There are two major types of trust under Missouri law: testamentary and “living.” If a trust is funded (or filled with assets) during the life of the trust-maker (often referred to as a “settlor” or “grantor”), it is considered a “living” or “lifetime” trust. By contrast, a trust created at the death of the grantor by the will is referred to as a “testamentary” trust. Testamentary trusts are less common but are sometimes used in Medicaid and special needs planning because testamentary trusts are not included in a person’s estate for purposes of determining benefit eligibility. While a living trust typically allows a person’s estate to entirely avoid the probate process, testamentary trusts only come into existence when a will is probated in court.
Revocable and irrevocable trusts.
Trusts can also be either revocable or irrevocable. Revocable trusts are usually completely changeable by the grantor at any time and for any reason. They can add or remove terms, name a new trustee, change the beneficiaries, or undo the trust entirely.
An irrevocable trust, by contrast, is not subject to being changed or revoked by the grantor. Even irrevocable trusts, however, can be changed or revoked by a “trust protector“: a third party person appointed by the trust documents or by a judge to exercise the level of control over the trust laid out in the trust documents. This person might be a trusted friend, a corporate fiduciary, your financial advisor, or even your drafting attorney. Additionally, statutory “swap powers” and broad trustee powers can allow for distributions out of an irrevocable trust.
Each type of trust enjoys various advantages and disadvantages. For example, assets in irrevocable trusts are usually not considered part of a settlor’s taxable estate and therefore can be designed to minimize estate taxes and provide asset protection in the event of divorce, a creditor attack, or bankruptcy.
Advanced Estate Planning Tools
A trust can allow you to:
- Avoid the costs and delays of probate
- Shield your assets from creditors and predators before and after your death
- Name a trustee to manage assets in the event of your incapacitation
- Minimize or eliminate estate taxes
- Ensure that assets remain under a designated trustee's control for the benefit of your child or other beneficiary subject to your rules
- Protect assets in a second marriage
- Decrease the likelihood that a court will appoint a conservator in the event of your incapacitation
- Provide for minors or irresponsible heirs
- Provide for those with special needs while ensuring access to public benefits
- Ensure children in blended families inherit
- Avoid nursing home poverty
Start working with a St. Charles Trusts Lawyer today.
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