Trust FAQs
A trust can be an invaluable part of your estate plan, yet many people go into estate planning without a firm grasp on what exactly a trust is or does or why they might need one. Below we answer some frequently asked questions related to trusts that we often hear as we talk to individuals and families in Pinellas and Pasco County about their estate plans. For personalized advice and assistance tailored to your unique circumstances, contact Miaoulis Law to sit down with an experienced Palm Harbor trust lawyer dedicated to creating a comprehensive estate plan that meets your needs.
What is a trust, and how does it work?
A trust is a legal arrangement in which a trustee holds and manages assets on behalf of beneficiaries according to the terms set by the trust’s creator (known as the settlor or grantor). Trusts can be used to avoid probate, protect assets, provide for loved ones, and manage wealth efficiently.
What does a trust do?
There are several types of trusts, with each one serving a particular purpose. Some of the most common trusts include:
- Revocable Living Trusts – Allows the grantor to retain control over assets during their lifetime and make changes as needed. Upon the grantor’s passing, assets pass directly to beneficiaries without probate.
- Irrevocable Trusts – Typically used to provide asset protection or tax benefits, or for other specific purposes. Irrevocable trusts cannot be altered after creation.
- Special Needs Trusts – Designed to provide funds for a disabled beneficiary without affecting their eligibility for government benefits such as Medicaid or Supplemental Security Income.
- Charitable Trusts – Used to support charitable causes while providing tax advantages to the grantor. Charitable trusts can benefit charities as well as family members and other beneficiaries, depending on how they are structured.
- Testamentary Trusts – Created through a will and takes effect upon the grantor’s death.
What are the benefits of a trust?
A trust offers numerous benefits depending on how it is set up, including:
- Avoiding probate and expediting asset distribution
- Maintaining privacy since trusts do not become public records
- Protecting assets from creditors and lawsuits
- Providing ongoing financial support for beneficiaries
- Managing assets for minors or individuals with special needs
Do I still need a will if I have a trust?
Yes. A will is still necessary to cover assets not included in the trust and to appoint guardians for minor children. A “pour-over” will can ensure that any remaining assets transfer into the trust upon your passing, which helps to avoid probate.
Who should I pick to be my trustee?
A trustee can be an individual, such as a family member or friend, or a professional, such as an attorney or financial institution. The trustee is responsible for managing and distributing trust assets according to the trust’s terms. Choosing a trustworthy and competent individual is essential to ensure your wishes are carried out properly. You can also serve as the trustee initially and name a successor trustee to take over the role after you.
Can I change my trust after it is created?
If you have a revocable living trust, you can modify or revoke it at any time. However, irrevocable trusts cannot be changed once established, except under limited circumstances and with court approval.
Will my trust protect assets from creditors and lawsuits?
While revocable trusts do not provide creditor protection, irrevocable trusts can safeguard assets from creditors, lawsuits, and long-term care costs under specific conditions.
How can a trust help with Medicaid planning?
Certain types of irrevocable trusts can be used in Medicaid planning to help individuals qualify for long-term care benefits while preserving assets for their heirs, including the aptly named Medicaid Asset Protection Trust. Proper planning with a knowledgeable and experienced attorney is crucial to ensure compliance with Medicaid eligibility rules.
Do trusts provide tax benefits?
Some trusts offer tax advantages, such as reducing estate taxes, minimizing capital gains taxes, and allowing charitable deductions. A tax professional or estate planning attorney can help determine the best strategy for your situation.
How can Miaoulis Law help with my trust planning needs?
Miaoulis Law provides comprehensive trust and estate planning services tailored to each client’s needs. Whether you require a revocable trust for probate avoidance or an irrevocable trust for asset protection, our team will guide you through the process and ensure your estate plan aligns with your goals.
If you have additional questions or would like to schedule a consultation, contact Miaoulis Law today.