Everyone, regardless of age, needs to take time to consider how they want their property and money divided in the event of his or her death. There are so many options it can seem overwhelming. Why do I need a Will? Do I need a Trust? What’s the difference between a Revocable and Irrevocable Trust? Do I need to consider a Special Needs Trust? Someone told my Mom she needs a Qualified Income Trust? What should I do? With a visit to an Estate Planning attorney, you can come up with the best plan for your individual situation and your family. An experienced attorney can walk you through the Estate Planning process and help you come up with the best way to ensure your family gets the most out of your estate. Many of the options can help reduce tax liability, avoid probate and reduce expenses and limit other issues that may be encountered while settling an estate.
Kinds of Trusts
- One of the more popular options is the Revocable Trust. Also known as a Living Trust or a Family Trust, it is effective in avoiding probate and reducing tax liability at death. Advantageous over the traditional Will, it enables you to manage your own assets during lifetime then ensure appropriate distribution after your death. You can serve as the Trustee of your Trust assets or you may appoint another person or agency as Trustee. This kind of Trust is labeled as revocable because you may make changes or completely terminate the Trust as long you live, providing you are not deemed incapacitated.
- A Special Needs Trust gives those who are disabled the opportunity to exclude certain income and assets from impacting eligibility for specific government benefits that are based on need, such as Medicaid which is designed to cover medical expenses. These Trusts provide disabled people with the chance to maintain savings to supplement their government benefits in the event they fall short of true need. In some situations, the government is repaid at the time of the disabled individual’s death.
- An Irrevocable Trust puts more authority in the hands of the person who will benefit at the time of your death. Changes cannot be made to this particular kind of Trust without the consent of the beneficiary. Once you move assets into the Trust, you have given up your rights of ownership and transferred them to the beneficiary. This kind of Trust removes the Trust’s assets from your taxable estate when you die.
- The final kind of Trust is the Qualified Income Trust. This Trust enables those individuals who have a monthly income in excess of $2,163* to qualify for Medicaid nursing home benefits to cover the costs of long-term skilled nursing care. Without this particular Trust established, the individual will not qualify for Medicaid coverage and would be responsible for their own long-term care expenses.
To learn more about Trusts or Estate Planning in the Daytona Beach area, call Heidi Webb today for a free consultation to discuss whether a Trust should be something you consider adding to your Estate Plan.