Can Or Should I Have More Than One Trust?
A person certainly can have more than one trust. The question of whether they should depend on the person. Almost every person can benefit from having a revocable living trust. There are multiple potential benefits if one has this type of trust, with the most commonly known benefit being “probate avoidance”.
Most people think of what I call “death probate” in this context. This is where a person dies with no estate plan whatsoever or with a will-based plan. In either case, if assets are in the person’s name, the assistance of the probate court is required to make sure that the assets are secured, inventoried and accounted for, that the person’s outstanding debts are paid and that their remaining assets are distributed to either their “heirs at law” (persons who inherit without a will according to a ‘one size fits all’ plan created by the state legislature) or “devisees/legatees” (those named in the person’s will to inherit). What people often don’t realize, however, is that there is another type of probate that can be avoided. I call this “living probate”. If a person becomes unable to handle their affairs, a guardian and also a conservator (if there are assets) may need to be appointed. To accomplish this, probate court proceedings are required to have these fiduciaries appointed to act under Court supervision to handle the person’s personal and financial affairs. This may end up being someone you would not have chosen. In addition to the delays that can arise in procuring such appointments (leaving the person to be protected vulnerable), there are also ongoing expenses involved that can be avoided. Some that come to mind include filing fees, annual accounting fees, guardian ad litem fees, compensation for the fiduciaries, etc., not to mention attorney’s fees. Such fees can extend for decades while the incapacitated person remains alive and all diminish the person’s estate. As you may now understand, living probate is worth avoiding, and a living trust where the person designates a trusted “trustee” to act for them, is one of the most secure ways to avoid it.
A trust can be particularly helpful in many circumstances. For example, when minor children are left without their parents, a properly prepared trust avoids the delay of waiting for Court appointments of fiduciaries (e.g., a conservator and/or guardian) to obtain the required authority to act on their behalf. Otherwise, children may be left in a precarious situation without available resources and protection. Also, for some high net worth people, it may be advisable to irrevocably transfer assets during life in order for them not to be included in their taxable estate at death. Trust is the best way to protect those assets and ensure they go to whom they are intended for. Certain types of charitable trusts may be used for this purpose. Another reason one might have more than one trust is to save assets from Medicaid. Each state has its own name for Medicaid, as Medicaid is the federal term for the joint venture between the federal government and each state. In Massachusetts, Medicaid is called MassHealth Long Term Care.
What Are The Different Types Of Available Trusts? What Is Their Purpose?
There are two basic types, but the purposes and uses are myriad. The basic types include revocable (or changeable) trusts and irrevocable (non-changeable) trusts. There are also “living” trusts and “testamentary” trusts. Living trusts are set up during life with the intent that they provide assistance to you and/or your beneficiaries during your lifetime. Living Trusts can be revocable or irrevocable. Testamentary trusts are set up via a will and come into existence at the death of the Trustor/Donor. These trusts are typically irrevocable. There are other types of irrevocable trusts for asset protection, Medicaid qualification (which is state-specific), Special Needs trusts, charitable trusts, tax avoidance trusts, and the list goes on. There is a trust called an “ILIT” which allows a person to transfer life insurance in a way that is most beneficial for estate tax purposes as well as providing liquidity to an otherwise illiquid estate. There are many more types of trusts and varieties within each type. It is important to carefully consider, with the help of a knowledgeable estate planning attorney, your specific goals in setting up a trust to ensure that it provides the level of flexibility and resources needed to achieve your goals.
Do I Lose Control Over My Assets If I Have A Trust?
It depends on the type of trust and the purpose of the trust. With a revocable trust, the answer is no. If you completely give away your assets under an irrevocable trust and are not the trustee of that trust, however, you would lose control over assets. There are some ways that you can retain a level of control, even where you give away the assets. This is where the services of a knowledgeable attorney can assist you.
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