Have you been wondering what the term “inter vivos trust” means and why it should matter to you? As it turns out, this type of trust is one that you’ve probably read about in your research, but it is more commonly known by its other name – the living trust. Our Charlotte living trust attorney will explain what you need to know about this type of trust.
How a revocable living trust works
The revocable living trust is an estate planning device that you should explore before you make any final decisions. Contrary to a widely held belief, you do not have to be a multimillionaire to benefit from the creation of this type of trust. Plus, you do not surrender control of assets you convey into a living trust. You can act as the trustee while you are living, and you can also be the initial beneficiary. And you can change the terms of the trust or even revoke the trust entirely at any time.
The Revocable Living Trust
A revocable inter vivos trust is a powerful legal agreement that can be used for a variety of different purposes. This trust involves a trustor (or grantor) who transfers his assets into the trust for the benefit of someone. That trustor can name himself as the trustee and keep control over the assets while he is alive. He can even write the terms of the trust so those assets are used for his own benefit until he dies, at which time they will be directed for the benefit of the beneficiaries the trustor names. A successor trustee is designated to take control when he dies.
The benefits of revocable trusts in general
There are some special advantages to revocable trusts. They don’t require the trustor to give up control over his assets since he can serve as both trustee and beneficiary during his lifetime. Moreover, these trusts can be revoked at any time so even the transfer of ownership can be reversed if needed.
Revocable trusts can provide a useful way to transfer assets to heirs when you die since the terms of the trust will determine which beneficiaries receive which parts of the estate, when they will receive it, and how they will receive it. These trusts can be used for a variety of purposes due to their great flexibility, including divorce or creditor protection for beneficiaries, spendthrift protection, special needs protection, or tax protection.
The Irrevocable Living Trust
If you’re more interested in greater tax advantages and stronger asset protection, the irrevocable trust may be a better option. While many people are reluctant to use irrevocable trusts because of the limited ability to change them once they are created, they have significant benefits. For example, an irrevocable trust can protect against estate taxes by removing assets from your estate. Since those assets are no longer owned or controlled by you, they are not counted when your estate’s value is calculated for tax purposes.
The irrevocable trust can also prevent assets from being counted by Medicaid when you’re trying to qualify for nursing home benefits. Of course, to make the most effective use of any trust for Medicaid planning, it is best to begin your efforts early. That will help you to minimize any chance that you might run afoul of the program’s look-back period and end up incurring an ineligibility period.
Specific types of living trusts
Some specific types of trusts can be used to accomplish specific goals. Charitable trusts can provide funds to a charity for a set period of time, with whatever is left over at the end of that time going to your heirs. You can even set up a trust that provides income to you until you die and then delivers the remaining assets to your favorite charity.
A spendthrift trust can be a useful way to ensure that your heirs don’t frivolously spend their inheritances. These trusts can provide measured distributions over time, or simply protect the inheritance from the heir’s creditors. You can even create a trust to manage your assets in the event that you are incapacitated. That can be an effective way to protect your estate from a conservatorship in case of a lengthy period of incapacitation. You can also create trusts to care for pets or manage other planning needs that are difficult to address through traditional wills and powers of attorney.
Join us for a FREE seminar today! If you have questions regarding living trusts or any other estate planning matters, please contact the experienced attorneys at The Potter Law Firm for a consultation. You can contact us either online or by calling us at (704) 944-3245 (Charlotte, NC or Huntersville, NC), or for individuals in Kentucky, (606) 324-5516 (Ashland, KY) or (859) 372-6655 (Florence, KY). We are here to help!