What is a Trust?
A trust is an agreement that describes how assets are managed and held for the benefit of another person. They can include anything ranging from real estate to cash and investments. Each one varies in size and in benefits. There are different requirements for different types. Some have specific exemptions and others offer beneficiaries for assets that include annuities and more. The person the grantor designates to oversee the trust is called the trustee. This person has a fiduciary responsibility to manage the trust’s assets.
What is a Trustee?
As a trustee, you have a fiduciary responsibility to oversee the management of the funds honestly and correctly. The trustee must keep the cash in an interest-bearing account and regular assessment of investment, risk, return and diversification is required.
What are the Benefits of a Trust?
Each type offers several benefits including protecting assets from lawsuits. Typically, after a person passes away, their estate goes through probate, making the will and assets viewable by the public. If there are any creditors, they will receive payment. Assets in multiple states will result in probate fees in each state. However, having your assets in a trust will shield them from the record. Therefore these assets are off limits from creditors and are not subject to probate fees. Additionally, by clearly designating beneficiaries in your trust, you may prevent lawsuits between heirs.
How is a Trust Taxed?
Depending on the type, there are different tax protections. For instance, a life insurance trusts may protect life insurance death benefits from estate taxes. Revocable living trusts designate a trustee to manage and control the property of the living grantor. This type of trust offers management and credit shelter where the estate taxes can be reduced. Other tax benefits include the size of the estate with charitable contributions and savings from reducing transfer taxes.
Why Open a Trust?
A trust has flexibility in the way that it provides for beneficiaries. Therefore creating an ability to put aside funds for education and medical support or to decide at what age to distribute the funds.
Where do I Start?
If you do decide to create a trust, please contact Cherewka Law, your local estate planning attorneys near Harrisburg, PA so that we can assist you in determining your needs, goals, and family situation.
