To protect financial assets in the future, individuals should establish a trust fund as it is an essential estate planning tool. A trust fund allows individuals to put a portion of their money in an account to preserve their funds to later be distributed to their beneficiaries. Assets in a trust will only be distributed after the grantor has died. Trust funds are extremely beneficial as they can help individuals transfer their assets to whom they desire once they’ve died. If you need help creating a trust fund, contact our qualified Montgomery County Trust Attorney who can help you protect your assets.
What are the different types of trust funds?
Creating a trust fund is extremely important as it allows individuals to set aside a specific amount of money that will be transferred to their loved ones after they’ve died. When an individual creates a trust fund, they will have to decide which type of trust fund they intended to use to distribute their assets. Individuals should consider creating an:
Irrevocable Trust
An irrevocable trust is a trust that cannot be modified or changed in any way once it is established. This type of trust cannot be revoked once created. When it is created, the grantor relinquishes their rightful ownership of the trust and transfers it to their beneficiaries. Individuals may choose to create this type of trust fund as it can assist individuals to limit their estate taxes as well as potentially shield their assets from creditors.
Revocable Trust
However, on the other hand, individuals could create a revocable living trust. This type of trust can be modified or changed. If an individual wishes, the trust could be revoked at any point as well. A major difference between an irrevocable and revocable trust is the grantor’s control over the trust. In a revocable living trust, the grantor has total control over the trust fund until they die. Once they have died, their assets in the trust will be distributed as they desired.
Testamentary Trust
A testamentary trust is created with a grantor’s will. This type of trust can only be obtained when the grantor dies. The terms of the trust will be specified in a will. Typically, this type of trust addresses assets relating to the estate.
Special Needs Trust
Under certain circumstances, individuals may create a special needs trust to ensure their disabled loved one is provided for once they’ve died. To remain eligible for certain special needs benefits that provide long-term care for disabled individuals, a special needs trust must be established. This will allow a beneficiary to qualify for special benefits such as Medicaid which will ensure their needs are provided for.
Charitable Remainder Trust
Oftentimes, individuals have a beloved charity they wish to leave money to when they die. In this case, they would create a charitable remainder trust which would distribute a certain portion of assets to their beloved charity.
If you need help creating a trust fund, don’t hesitate to contact one of our trusted and skilled attorneys. With years of experience, our firm can guide you through the process.