A trust is an estate planning instrument that takes effect while you are living and survives your death. It can provide valuable protections to both you and your beneficiaries. There are many types of trusts for estate planning, depending on your needs and ultimate goals. The key is selecting the right type. Here’s a look at some of the most used types.

Revocable Trusts

Revocable trusts are extremely popular because they can be changed, and they help avoid probate. Assets can be added to or removed from the trust at any time. The trust itself can be revised as well. You, as the trustee, maintain full control during your lifetime. Upon your death, the designated backup trustee becomes responsible. You can name your children as beneficiaries but allow the trustee to maintain oversight until your children reach a certain age, at which point they receive the full proceeds from the trust. This is one of the most popular types of trusts for estate planning for families with children.

Irrevocable Trusts

As the name implies, irrevocable trusts cannot be changed regardless of whether you are living or deceased. Once assets are placed in the trust, they permanently belong to the trust. Upon your death, the terms of the trust are activated for the benefit of your designated heirs. Irrevocable trusts are often used to shield assets (since those assets no longer belong to you as an individual), but they have limitations that should be well understood in advance.

Charitable Trusts

If you plan to leave your assets to charity, a charitable trust can be set up in advance. Charitable trusts can provide tax benefits during your lifetime. They can also provide estate tax savings upon your death since you will have a lower estate value given the prior contributions made to the charitable trust.

Special Needs Trusts

If you have dependents with special needs, you may be concerned about whether assets you bequeath upon your death will disqualify them from government benefits. A special needs trust is designed specifically to address this. It is created for the benefit of your dependents but they neither control distributions nor can revoke the trust. It allows your dependents to receive financial support from the trust and from government programs.

Tax By-Pass Trust

For married couples, a tax-bypass trust can provide tax savings to their children and other heirs. Typically, when one spouse dies, assets may be transferred to the other spouse without much tax obligation. However, when the second spouse dies, significant taxes may apply when assets are transferred to the surviving spouse’s heirs. A tax-bypass trust can help mitigate that burden and lead to significant savings.

Additional Types of Trusts for Estate Planning

The above are just a few examples of the different types of trusts for estate planning. Gun trusts, totten trusts, spendthrift trusts, constructive trusts, and asset protection trusts are a few others that you might consider.

Contact our team for assistance with creating trusts for your estate plan. We’ll help you understand your options and achieve your estate planning goals.

There are many benefits to revocable trusts in estate planning, making it one of the most popular options. If you’re looking to create a new estate plan and aren’t sure whether a revocable trust is a good fit, here are a few key benefits to consider. You can weigh these against the features of other options you are evaluating.

1 – Can Be Changed

One of the biggest benefits of revocable trusts is the ability to change it. At any time, you can alter the terms through an addendum or replace it with a newer version. Thus, it easily adapts to changes in your life. For instance, you may have certain preferences while your children are young versus when they become young adults. You can change trustees, beneficiaries, or any other specific terms as needed. It’s truly a flexible document.

2 – Avoids Probate

Avoiding a lengthy and costly probate process is a primary goal for most estate plans. Revocable trusts do precisely this. Assets are transferred into the trust in advance rather than going through probate. Additionally, a pour-over will can transfer any remaining assets upon your death. Although those residual assets may require probate, the process is usually less complicated.

3 – Simplifies Transfer of Assets

Transferring of assets to heirs is easier in estates with revocable trusts. Since assets already belong to the trust, they can be quickly liquidated or transferred. As for monetary distributions, that can be done as soon as debts are settled and the remaining value is determined. There are no court proceedings or other such delays.

4 – Takes Effect Immediately

Trusts become active as soon as the legal documents are prepared and signed, so they can be helpful in cases of disability or incapacitation. While you are living and fully capable, you are the trustee and control the assets in the trust. In cases where you cannot perform this duty, the individual(s) that you name as backup(s) have the ability to act on your behalf. This, along with a power of attorney, can ensure that your finances are properly managed under those circumstances.

More Benefits of Revocable Trusts

These are just 4 of the key benefits of revocable trusts in estate planning. Based on your personal circumstances, there are many other protections available. For example, if you have minor children, revocable trusts can provide financial assistance to cover living expenses, medical care, and education expenses until they reach a certain age, after which they receive the balance of the trust. If you own real estate in multiple states, in can simplify the sale and transfer. Since the terms of a trust can vary based on your needs, it’s important to consult with an attorney to discuss your goals and how revocable or other trusts can help you accomplish them. Contact us to schedule a consultation with our team of Massachusetts estate planning attorneys.

Although every estate plan is technically unique and designed to fit your specific needs, there are some documents that appear in most plans. Below is a quick overview of what those are. Should you include these common estate planning documents in your own estate plan?

Will

A will allows you to list desired beneficiaries for your assets and who should care for your children. Without it, courts will designate heirs based on intestate succession laws and guardians based on information available to them. Although it sounds like a straight forward document, an improperly created will is much like having no will at all. The best way to ensure your wishes are honored and disputes among family members is to have a will formally prepared by a Massachusetts estate planning attorney.

Healthcare Proxy

A healthcare proxy allows someone you trust to make medical decisions on your behalf when you are unable to do so yourself due to incapacitation or disability. By making it clear who has this power, it can avoid disputes among family members and delays in medical care. The person you select need not be a relative, but it should be someone familiar with your preferences regarding life saving measures.

Power of Attorney

Financials are another important consideration. If you are incapacitated or disabled, who will manage your financial affairs? This may include paying your mortgage, rent, utilities and other bills. By assigning power of attorney ahead of time, the person of your choosing can instantly step in when needed. Again, be sure to select someone that you thoroughly trust. Additionally, it may be best to select someone who is not also your healthcare proxy.

Trusts

Another of the most common estate planning documents are trusts. There are many types of trusts, each with different goals and benefits. Many people use trusts to avoid a lengthy and expensive court probate process. Trusts can also enable more detailed instructions on how your assets should be managed and disbursed. Selecting the right type(s) of trusts is key to achieving your intended outcomes.

What Common Estate Planning Documents Do You Need?

So, which of these common estate planning documents will you need? It truly depends on your personal requirements and goals. The plan for a single person will vary from that of a married couple with children, a divorced person, or someone with children from previous marriages.

Additionally, special circumstances such as providing for long-term care of a disabled dependent, minimizing estate taxes, gifting strategies, and anonymity must be taken into consideration. Every estate plan is unique to the individual and must be reviewed and changed as one’s life circumstances change. If you’re interested in creating an estate plan, contact our team to schedule a free consultation.

There are various types of trusts that can be used for estate planning. ABC Trusts are one available for the benefit of surviving spouses and accounts for differences in all tax exemptions. Below is an overview of Burlington MA ABC trusts to better explain this option.

Advantages of ABC Trusts

ABC Trusts are a form of irrevocable trusts. They are helpful in states where the estate tax exemption allowed is less than the federal one and the estate value exceeds both exemption levels. It permits an estate to take full advantage of federal exemptions while deferring a specific amount of state taxes until after the surviving spouse dies.

Examples of How They Work

ABC trusts separate assets into 3 trusts. The B trust holds the exact amount exempted by the state. The remainder of assets up to the federal exemption level are entered into the C trust. Anything above the federal level go into an A trust. For example, assume that you have an estate with 7 million dollars and live in a state with an tax exemption of 1 million dollars (compared to the federal 5 million exemption). The following may take place:

• B Trust of 1 Million
• C Trust of 4 Million
• A Trust of 2 Million

The B and C trusts benefit from the federal tax exemption. The B trust is exempt from state taxes. The C trust postpones state taxes until the surviving spouse passes away. The A trust does not benefit from any exemptions.

Help With ABC Trusts for Burlington MA

This overview of Burlington MA ABC trusts includes only a basic explanation. There are other considerations when it comes to planning an estate. For expert advice, it is important to speak with a local Burlington MA estate planning attorney. Your attorney can review your personal situation, explain all of the options, analyze tax implications, and create a plan that best fits your needs. Feel free to contact Peter DaMore at Law Offices of Peter T. DaMore Jr. by calling 781-229-7900 for information.

Irrevocable trusts cannot be revised after they are established. Revocable trusts also become irrevocable after the trustmaker dies. Irrevocable trusts may be comprised of multiple agreements each with a different goal. The following are details on the types and goals of irrevocable trusts including reducing estate taxes, protecting assets, and charitable donations.

Types And Goals Of Irrevocable Trusts

Reducing Estate Taxes

An irrevocable life insurance trust is one way of transferring property from an estate in order to reduce estate taxes. The person who owns the assets and sets up the trust basically transfers their belongings into the trust (to the trustees and beneficiaries) and therefore no longer possesses the assets personally. Those belongings therefore cannot be taxed as part of the estate when that trustmaker passes away.

There are other trusts that can accomplish this same benefit. AB trusts can used to benefit a surviving spouse for a certain exempted amount plus deferment of estate taxes for amounts exceeding the limit. ABC trusts are helpful in states with estate taxes and are helpful when the state tax exemption amount is lower than the federal one.

Protecting Assets

Most irrevocable trusts can protect family assets. Since property is transferred into the trust and are no longer personal assets, they are hidden from creditors and others who may file personal claims against the trustmaker. Family members can be made the beneficiary of the trust and would still receive the benefit from those assets. This may be an important feature for certain people based on their profession and potential liabilities.

Charitable Donations

A few types of irrevocable trusts are specifically created for charitable donations. Examples of this are charitable remainder trusts and charitable lead trusts. Trustmakers can transfer assets into a charitable trust while living and obtain a charitable income tax deduction for the tax year. If the transfer takes place after death, then the estate will obtain the tax deduction.

More Information On Irrevocable Trusts

If you are comparing revocable and irrevocable trusts, it is important to understand their differences and benefits as it applies to your personal situation. The above types and goals of irrevocable trusts is merely intended as a basic overview. Contact Peter DaMore at Law Offices of Peter T. DaMore Jr. for further information about trusts and other pieces of your estate plan.

Revocable living trusts allow for changes at any time. A trust amendment can be created to edit certain provisions or beneficiaries. It is also possible to void or modify the entire contents of the trust through an amendment and reinstatement. The following is advantages and disadvantages of Massachusetts revocable living trusts.

Revocable Living Trusts

The downside of revocable living trusts are that assets in the trust are treated as personal assets. It therefore offers no special protection from creditors if you are sued. Upon death, all assets are subject to any state and federal estate taxes. Depending on your finances, these two items can result in significant risk or loss.

Reasons to Use Revocable Living Trusts

There are a few reasons why you would select revocable living trusts despite the disadvantages noted above. Below are the key reasons that many select this type of trust.

Planning for Disability

Revocable living trusts are often used to plan for future disability. Assets in a revocable trust can be managed by a trustee rather than by a court-assigned guardian in the event of mental disability. This can be an important factor when there is a family history of mental illness.

Avoiding Probate

The type of trust will determine whether the courts get involved. With revocable living trusts, assets are given directly to beneficiaries without going through a court proceeding. This shortens the transfer process and time frame.

Privacy Considerations

Because transfers take place outside of court, the trust agreement does not get filed into public record. Detailed information on your assets may therefore be kept private. The identity and assets transferred to specific beneficiaries is also not disclosed. This maintains the privacy of everyone involved.

More Advantages And Disadvantages Of Massachusetts Revocable Living Trusts

The advantages and disadvantages of Massachusetts revocable living trusts provided above was shared by Peter DaMore at Law Offices of Peter T. DaMore Jr.. For additional information on revocable living trusts and other elements of your estate plan, contact Peter at 781-229-7900 or via email at pdamore@ptdlaw.com. We can explain the benefits of revocable living trusts and irrevocable trusts and help you select the option that best accommodates your situation.