Lawyers Creating The Sorts Of Trusts You Require
A trust can be an important tool for preserving wealth and avoiding taxes. It can also be an unnecessary and expensive complication to an estate plan. The attorneys of The Pellegrino Law Firm P.C., will review your situation and tell you whether a trust is truly in your best interest.
The Sorts Of Trusts We Prepare For You
Our attorneys prepare a variety of trusts, including:
Family trusts: Family trusts allow those who establish them to control how the assets are used. Some may direct that the funds be used solely for the education of their grandchildren. Others may decide to make the funds available to heirs only after they reach a certain age. Many trusts can protect assets contained within them from inheritance taxes, lawsuits and property distribution after a divorce.
These are typically revocable (changeable) trusts, which can be used to separate assets between spouses in order to protect the maximum amount of assets from taxes.
The federal government exempts up to $3.5 million in assets per person from inheritance taxes. If a couple’s assets exceed that amount, a family trust can be used to protect up to $7 million in assets. We will separate assets, titling them in each individual’s name. For example, the wife might own the house and other real estate while investments are in the husband’s name. When one spouse dies, the assets go into the trust.
Consider a husband and wife who each have assets worth $2.5 million. If the husband dies and leaves his assets to his wife, only $3.5 million of the $5 million total will be protected from inheritance taxes when the wife dies. The remainder is taxed at 55%. If the husband leaves the money to the family trust, the wife can have access to the full amount of the assets during her lifetime and pass on what’s left to her children after her death inheritance tax-free.
Irrevocable life insurance trusts: These trusts are designed to keep life insurance out of your estate. A life insurance policy is placed in a trust. The trust designates the beneficiaries and how the trust funds can be used. After the insured dies, the insurance policy funds the trust. Because the trust, not the decedent, owns the policy, the estate pays no inheritance tax.
Age 21 trusts: We can only gift $1 million in our lifetime to an individual without it being taxed. However, you can place $13,000 each year into a trust for each of your children, grandchildren or any minor. These funds do not count against your $1 million lifetime gifting limit. You can transfer $13,000 each year into these trusts. The beneficiaries may gain control of the trust’s assets at age 21 or leave them in the trust until an older age designated in the trust agreement. Your estate does not pay inheritance taxes because the money is in a trust that’s already in their name rather than in your estate. This is a tool to reduce your estate and pass wealth on to your children or grandchildren.
Disability trusts: If you have a disabled child, you may wish to consider a supplemental needs trust or a special needs trust. These trusts are essential if your child will otherwise be eligible for benefits from government sources. The trust assets are to supplement and not reduce or replace the available benefits.
Pet trusts: Taking care of a pet can be costly. A recent trend in estate planning is to create trusts for the care of pets after their owners have died. Our attorneys can help ensure that the funds are available to support your pet if and when you are no longer able to do so yourself.