Trust Planning Attorneys Compassionately Assisting Families throughout Gainesville
Trusts are one of the most popular estate planning tools because they allow individuals to obtain greater control over how their assets will be passed on after death. But perhaps the most sought-after benefit of a trust is the possibility of avoiding probate and transferring assets directly to beneficiaries. Is a trust the right choice for you? The Johnson Law Firm, PC, helps Gainesville, VA families with all their trust and estate planning matters every year. Let’s take a look at some important answers to questions you should ask before you choose to set up a trust.
Which is Better For Me – a Trust or a Will?
Trusts and wills are two completely different estate planning tools that can work together to safeguard your estate and protect your wishes after death. A will is a document that contains your wishes for what should happen to your assets and properties after you die, and it also includes other important items such as who should take care of your minor children in case you pass away unexpectedly.
Wills become public documents once they are recorded at the local court and often need to be probated before assets can be passed on to heirs. Depending on the valuation and complexity of your estate, the probate process can take several months or even a year to be completed. It can also incur significant costs and probate taxes on top of attorney fees and executor fees. The costs are often left to be paid by the estate or by surviving relatives when the estate does not have the necessary funds.
On the other hand, trusts are private and do not need to be probated when the trustor dies. You can draft a trust specifying exactly who and when will receive the money or assets after you pass away, and depending on the type of trust, you may also be able to have a layer of protection against creditors. Think of a trust as a “container” for all the assets you transfer into it. The key difference is that a will does not require you to transfer the ownership of your assets during your lifetime, whereas a trust needs to be funded and your assets will be technically owned by the trust while you are still living.
When Are Trusts Strictly the Best Option?
Trusts and wills usually work together as estate planning tools, one not being a substitute for the other. Certain estates may be simple and considered small estates in Virginia, thus being eligible for a simplified probate process, making it unnecessary to have a trust set up just for avoiding probate. But trusts can be the right solution for situations where you prefer a beneficiary to receive his or her inheritance in monthly or yearly payments rather in a lump sum to avoid tax issues or in case your beneficiary may be at risk of recklessly spending the money received.
What is the Difference Between a Revocable Living Trust and an Irrevocable Living Trust?
There are several types of trust that can be created, depending on your personal goals and the nature of your estate. One of the most important aspects to understand is the difference between a revocable living trust and an irrevocable living trust – and what each of them can do for you.
Simply put, a revocable living trust can be undone at any time. You may set up a revocable living trust and transfer your assets to the trust, but if in a few years you decide you no longer need it or want to add or remove assets from the trust, you can do so without the need to discuss it with the beneficiaries to receive authorization. It protects you from having to pay gift taxes while still allowing you to retain control of trust assets. However, a revocable living trust will not shield you from creditors.
An irrevocable living trust, as the name suggests, cannot be (easily) undone. You will transfer ownership of your assets to the trust and will no longer be considered the owner. While it requires you to give up ownership of your assets, it offers a much higher level of protection against creditors and can offer additional tax savings.
What Help Can a Trust & Estate Planning Lawyer Provide?
At the Johnson Law Firm, PC, Attorney James Johnson has been helping many customers in Gainesville to understand the types of trust and estate planning tools available to them and provides valuable insight to assist customers in selecting the best alternative for their estate plans. If you are interested in learning more about trusts and estate planning or would like to begin the process, contact the Johnson Law Firm, PC, at (703) 884-8003today.