Estate Planning: Trusts, Wills, and more

Ensure that your property is handled the way you want it to be handled.

 

Estate planning consists of planning what to do with your estate after you pass away. It is a good idea to have an estate plan in place to make sure your assets are dealt with according to your wishes. Estate planning typically includes a trust, a will, a durable power of attorney, and a medical directive, amongst other things, depending on your circumstance. These are listed and described below.

 

Trusts

A trust is an estate plan into which you transfer assets, such as real estate or bank accounts. When you pass away, the assets in the trust are distributed to the beneficiaries that you have named in your trust. The purpose of a trust is to plan what happens to your assets if you pass away, and to give you the power to choose what happens to your assets rather than the court deciding how to distribute your property, you would want to avoid, because this would also result in significant attorney’s fees.

The most popular type of trust is called a revocable living trust. For this, we create a trust that allows you to choose a trustee who manages the assets in the trust. You yourself can serve as the initial trustee of your trust. A revocable living trust also allows you to designate a successor trustee, or a trusted person to manage your trust, once you pass away or become incompetent. The purpose of this trust is to avoid court probate, which is costly and time-consuming. In addition, this trust is revocable, meaning you can make changes to it or revoke the trust at any time.

 

Wills

A will can be used in addition to, or separate from, a trust to help protect your property and family finances. It is common for a pour-over will to be established in addition to a trust to ensure that your assets are distributed properly. A pour-over will serves as a backup to a trust. Meaning, if any assets were left out of the trust, this will ensures that these assets are still distributed the way you want them to be distributed.

Healy & Associates can help you determine if you need a will to determine how your estate is handled once you pass away. A will can outline how you want things handled, such as end-of-life care or other situations, and can be an essential part of estate planning.

 

Why create a trust or will?

The benefits of estate planning include minimizing the amount of taxes you have to pay, helping to manage your assets, and providing other financial advantages. The goal is to bypass probate litigation, minimize the amount of taxes you owe, and protect your financial privacy.

 

Other types of trusts.

At Healy & Associates, we pride ourselves on having knowledge and experience with many types of trusts and wills as a result of many years of practicing probate litigation. We can help you if your situation is unique or more complicated than normal. Listed below are other types of trusts and we will work together with you to decide if any are suited to your particular situation:

  • Revocable living trust. Discussed above, this is a very common type of trust that is created during your lifetime and ensures the way in which your property is passed on to your heirs after you pass away.
  • Irrevocable trust. This trust cannot be changed or revoked once it is created. However, the benefit of this trust includes tax advantages not available from a revocable trust. Examples include a life insurance trust, which protects the money from a life insurance policy from creditors and taxation. Another example is a split interest trust, which designates income to one beneficiary for a certain time period, and then to another beneficiary for another time period.
  • Testamentary trusts go into effect when you pass away. This type of trust addresses assets that are gained during your lifetime. It also covers assets that are created from passing away, such as from a life insurance policy or lawsuit settlement.
  • Married A-B trusts (bypass trusts) go into effect when a spouse dies. This trust divides into two separate trusts to help the surviving spouse gain tax exemptions. The assets of the deceased spouse go into the bypass trust. When the living spouse passes away, the assets are passed onto the beneficiaries. This trust minimizes estate taxes and maximizes income.
  • Qualified Terminable Interest Property (Q-TIP) Trust. When one spouse dies, this trust allows the surviving spouse to receive assets without needing to pay estate taxes. Assets are passed onto heirs after both spouses pass away.
  • Special needs trust. This trust ensures that disabled beneficiaries are provided with assets from the trust, and that the disabled beneficiary still receives government disability benefits. A trustee manages finances on behalf of the disabled beneficiary.
  • Generation-skipping trust. This trust helps avoid estate taxation by passing on assets to the grandchildren, rather than the children.
  • Qualified Personal Residence Trust (QPRT). This trust allows you to pass on your house to the beneficiary as a gift at the end of a term of years, while you use the house as your personal residence. This trust benefits you and the beneficiaries by avoiding estate taxes and creditors.

There are various factors that should be considered when deciding which estate planning route is right for you. Estate planning may include additional probate factors such as conservatorships, guardianships, and more. Healy & Associates is well-versed in these areas of probate and can provide legal assistance for your particular situation.

Start your estate planning today.

Call us at (714) 442-1522 to ask us any questions, or to set up a telephonic appointment or in-person appointment at our Santa Ana location to discuss which option is best suited for you.