Arranging for the distribution of assets after death is not a task most people approach eagerly. It is, however, a necessary task. That's where trusts can come into play. A trust, simply defined, is an arrangement whereby one person holds legal title to an asset and manages it for the benefit of another. For estate planning, trusts may be used in several ways.
One of the most valued characteristics of a trust is its ability to bridge the gap between life and death. A trust can allow a person to "rule from the grave," so to speak. Generally, a trust may be established to last for many generations, ending 21 years after the death of the last named beneficiary, or after a specific number of years as permitted by state law.
A trust can allow a donor to transfer assets to a beneficiary, while simultaneously shielding such assets from creditors. For example, the laws of most states permit the creation of spendthrift trusts, which may allow you to place both trust income and principal beyond the reach of the beneficiary's creditors. Generally, these laws prevent the beneficiary from assigning any part of the interest in the income or principal of the trust, since most creditors seek property that could freely be assigned by the beneficiary. Consequently, attempts by creditors to claim assets can be hindered. In the case of a spendthrift trust, you are generally permitted to use the trust assets freely, even if the result is to prevent a beneficiary from dealing with the trust's assets at will.
When using trusts, planning is essential to ensure that they are properly structured. Therefore, be sure to seek the advice of a qualified, legal professional before making any final decisions. Your legal and financial professionals can be instrumental in creating an estate plan that can help you fulfill your unique planning goals.
Copyright © 2016 Liberty Publishing, Inc. Beverly, MA All Rights Reserved. - EPTD0U1-SQ