Legal trusts have become one of the most common ways to protect an estate. It can shield and distribute assets according the wishes of the settler (creator of the trust) and ensure the longevity of a business. In a previous article, we mentioned 3 common types of legal trusts. They included the qualified personal residence trust (QPRT), credit shelter trust (also known as a family trust) and the dynasty trust. Given the settler's objectives, each of these could be used for varying purposes. Below, we'll describe 3 more common types of legal trusts that you should consider.
#1 - Irrevocable Life Insurance Trust
Increasingly common amongst those who own businesses or other highly-valued assets that can't be liquidated quickly, the irrevocable life insurance trust uses your life insurance policy to pay for your estate costs. Business owners typically don't want their heirs to have to sell the business in order to pay the estate costs. Liquidating under those circumstances can have a significant impact on the value of the business. Instead, the settler's life insurance policy is used to pay for estate costs that are associated with the business.
#2 - Special Needs Trust
When a person receives financial support from the government, those benefits can be disqualified if that person inherits a large sum or receives a sizable gift. To ensure those benefits aren't jeopardized, a special needs trust can be established. Any gift or inheritance can be placed within the trust. An experienced attorney will often include a special provision within this type of trust. The provision can cause the trust to expire if the beneficiary's governmental benefits are ever subject to disqualification.
#3 - Qualified Terminable Interest Property Trust
Your family may include people who are members by virtue of divorces and remarriages. In some cases, you may want to ensure that the bulk of your estate is received by certain relatives. Many people use a qualified terminable interest property trust when they have children and marry someone who has their own children. This type of trust can be established to make certain their assets are given to their biological children when their spouse dies. In doing so, they can remove the possibility of someone else's children receiving a share of their estate.
Why You Should Hire A Lawyer
If your estate is worth a sizable amount, you should hire an attorney who is qualified to offer estate planning advice. A good lawyer can help you create the right kind of trust for your unique circumstances. He can review your objectives with you and create the type of trust that will best protect your estate. He can offer legal advice that will help you establish provisions and conditions that address how the trust distributes your assets after you die. Creating a trust for your estate deserves the attention of a trained legal professional.
Consider these Virginia Lawyers and Virginia Attorneys when in need of legal services.