A Summary of Different Kinds of Trusts
By Lane V. Erickson, Idaho Estate Planning Attorney
Because I've been an estate planning attorney for nearly 20 years I’ve had the opportunity to see and experience many different kinds and types of estate plans. In many of the estate planning documents that I have created my clients have utilized a variety of trusts to accomplish very specific things both while they are alive and after they have passed away. The reason trusts can be useful is because not every individual is the same. Idaho estate planning is designed to provide protection to each unique individual while they are alive, and also to distribute their money, property, and other assets to their family and other loved ones after they pass away.
The premier Idaho estate planning team at the Racine law office have assisted clients in the creation of their own customized estate plans for more than 70 years. Our team includes partners, associates, as well as legal assistants, all of whom have expertise and skill in working with each client individually to determine what their specific needs are. Once we have an understanding of what our client needs to accomplish, we are then able to discuss with our clients the various estate planning tools and options that exist to meet their needs. This discussion often includes talking about the different kinds of trusts that could be used.
The purpose of this article is to provide a short summary of some of the different kinds of trusts that exist. In providing this summary we also explain how these trusts could be useful in certain circumstances with the hope that you too would be able to see whether a trust would be an important part of your own individual Idaho estate plan.Revocable Trust?
A revocable trust, sometimes called a living trust, is usually used by an individual who wants to provide some specific protections for themselves while they are alive and also to avoid probate in distributing their money, property, and other assets after they pass away. The protections that a revocable trust could provide for an individual while they are alive is that they are able to name the individual trustees who would be in control of the money, property, and other assets that are located within the trust. This person would likely work closely together with the individual who was named to hold the power of attorney for this individual as well. However, the money, property, and other assets that are located within the revocable trust would not be controlled by the individual who holds the power of attorney.
Because this trust is revocable, the individual who created it can change it, modify it, or even completely revoke it whenever they choose. This could be useful because an individual may change their mind depending on the laws, and their own personal circumstances that exist at any time while they are alive.Irrevocable Trust?
An irrevocable trust is a little different. Once an irrevocable trust is created, and funded with trust assets, the individual who created it can no longer alternate modify it or change it. Specifically, this individual is now unable to revoke this trust.
Irrevocable trusts are often used when it comes to protecting assets of the estate from creditors. Additionally, certain types of irrevocable trusts are used when it comes to Medicaid planning in order to help an individual qualify for Medicaid benefits. Furthermore, irrevocable trusts are often used when it comes to an individual's desire to avoid the federal estate tax that may be applied to their estate. This is particularly useful for estates that have a value greater than $22 million for a married couple or $11 million for an individual who is single.Charitable Trust?
Charitable trusts are exactly what they sound like, a trust that is specifically designed for a charitable purpose. Again, a charitable trust is often used as a way of reducing an individual's estate so that no federal estate taxes are applicable. Many wealthy individuals believe that it would be far better to give their money, property, and other assets to a charitable purpose to reduce the value of their estate, rather than pay that value as an estate tax after they pass away. A charitable trust specifically identifies either a charity or a charitable purpose for which the money, property, and assets located within the trust will be used.
There are other monetary benefits for creating and donating to a charitable trust. In addition to reducing the value of an individual's estate, a charitable trust also provides opportunities for an individual to obtain tax exemptions for donations made to that trust.Supplemental Needs Trust?
A Supplemental Needs Trust is one that is designed specifically to help an individual who has a disability, or some type of handicap. In many instances, a disabled or handicapped person qualifies for a range of governmental benefits and/or other programs to assist and help them. Usually these benefits and programs have very specific limitations on the types and amount of assets that the disabled individual can own and yet still qualify for the benefits or programs they are receiving.
A Supplemental Needs Trust is created and used in such a way that the benefits and programs the individual is receiving are protected and will continue to be available. As an example, parents of a disabled child may create a Supplemental Needs Trust that they would fund upon their death. Language in the Supplemental Needs Trust would then specifically protect the money, property, and assets located within the trust and would simply use them to supplement the benefits and programs the disabled child is already receiving.Minor’s Trust?
A minor’s trust is specifically designed for the benefit of an individual who is under the age of 18. Once a person turns 18 they are considered a legal adult. As a legal adult they are entitled under the law to receive any money, property, or other assets that are held by a guardian for their benefit until they become an adult. The problem is, many 18 year olds do not yet have enough experience or knowledge to handle a large amount of money, property, or other assets that the law may require be distributed directly to them. Additionally, these individuals may not have access to these funds to help them while they are a minor.
A minor’s trust holds money, property, and other assets in trust for that individual until they reach the age decided upon by the parents or the other individuals who create the trust in the first place. Additionally, the individual who creates this trust can also be specific about how all the trust assets are to be used to benefit the minor while they are below the age of distribution. In other words, the trust can be used to benefit and help an individual with their education, their health, their maintenance and support, and so forth.
We have assisted numerous clients in the creation and use of a variety of trusts as a part of their estate planning. Each trust we create for a client is designed to meet a specific need or purpose defined by our client. If you are thinking about using a trust as part of your own Idaho estate plan, we are confident that we can help you too!Enlist an Idaho Estate Planning Attorney to Help You
Our team of Idaho lawyers can help you with any of your estate planning or probate needs. Whether you are seeking to create or review an estate plan for yourself or would like to help a loved one, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a free consultation. You can also email us directly at firstname.lastname@example.org or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho Estate Planning problems.