Different Types of Trusts
As a trust lawyer Danbury, CT has confidence in, we see this scenario all the time. You have a family, own a home (with a mortgage), have developed a small nest egg through either an employer-employee funded 401K, IRAs, own a hefty life insurance policy, and are in possession of a few valuable antiques. Do you need a trust? What kind of a trust? A qualified trust lawyer Danbury, CT families turn to can best answer your questions and provide you with the trust and estate planning advice that best fits your life situation.
There are several different types of trusts. Here are a few and a quick explanation of what they accomplish.
- Bypass Trust may be best for you if you have a large estate (greater than $11 million). This type of trust may help couples avoid estate taxes. Each spouse can pass a certain amount of money to their heirs without paying an estate tax. Using a bypass trust may expand the amount they can transfer. Ask a trust lawyer Danbury, CT residents want about the limits as the laws may change from year to year.
- Life Insurance Trust is a great place to park your life insurance policy if your net worth is large, because if you own your life insurance policy, the death benefits may be subject to estate taxes. You might consider letting the life insurance trust be the owner of the policy. You then gift money to the trust and the trust pays the premium for the policy. When you die, the trust is the beneficiary of the life insurance policy, and the beneficiaries of the trust are your heirs. Another benefit of this trust is that instead of the beneficiaries receiving the death benefits of your policy all at once, you can direct the trust to spread out the distribution of the funds or hold them for certain events or ages, at your discretion.
- Use a Charitable Remainder Trust if you have plans to contribute some of your assets to a charity when you die. If you create this trust you can contribute to the trust now and be eligible for a tax deduction. The trust is in the name of the charity. If you name yourself as an income beneficiary, you may give yourself an annual income. The charity gets the remainder of the money in the trust after you’re gone and it’s tax free. If your heirs think that this trust takes away from what they will inherit from you, purchase a life insurance policy in the same dollar amount as the charitable gift, and name your heirs as beneficiaries of the policy.
- A Qualified Terminal Interest Trust is a trust used to make sure that after you die if your spouse remarries but then dies, your children will receive the remaining assets instead of the money going to the new spouse. This trust does give income to your spouse while they are alive; however, after they die the assets remain in the trust or are distributed to the surviving children.
- A Medicaid Asset Protection Trust can transfer your assets to a trust to permit Medicaid eligibility and still allow you to have access to the funds for life. It is a very helpful took in Medicaid planning.
- Create a Living Trust if you want to protect your assets while avoiding probate. While you are alive, you transfer the title to property out of your name and into the name of the trust, as a trust lawyer Danbury, CT relies on can explain. This is a convenient way to organize all your property in one place making it easier for your heirs after you pass.
Creating the trust that fits your financial and family circumstances is best left to the professionals. Legal Sweeney estate attorneys have many years of experience in designing trusts and wills. Contact a trust lawyer Danbury, CT can look to in their time of need to set up a consultation.