Trust Settlement
Cut Out the Red Tape Between Your Beneficiaries And Their Gifts
Three parties must be present when a trust is created: a Grantor who creates and funds the trust, a Trustee who holds legal title and control over the trust, and Beneficiaries who receive trust funds. During your lifetime, it is customary for you to have all three roles if you settle a revocable trust which is the most popular trust type. The “magic” of a trust occurs when you pass away and the successor trustees whom you select may act immediately without court intervention which comes with delays and significant fees. An additional benefit of settling a trust is its status as its own legal entity that can purchase and sell property during the Grantor’s life.
Determine Whether a Trust is Right for You
The Benefits & Disadvantages Of Using A Trust
There are many advantages to using a trust over a Will. Trusts allow for the immediate transfer of assets to beneficiaries upon death, do not need to be probated and remain off the public record. The Grantor of a trust can exercise greater control over beneficiaries than in a will by setting certain conditions on when and how they receive assets and protect them against themselves if they are not financially responsible. Lastly, assets transferred to an irrevocable trust will be removed from the Grantor’s taxable estate if he or she Grantor lives for three (3) or more years after the transfer.
Disadvantages of using a trust are initial setup costs, so that you can actively use your trust during your life and avoid the significant cost of probate on the back end. Trusts can also be more complex to manage than Wills, especially if they include multiple beneficiaries or assets, and you might need a trustee with legal and financial expertise for ongoing management. Finally, there is substantial work to be done once the trust is settled it can only act upon assets that are transferred to by deed, assignment, or other manner. We instruct our clients on how to complete the transfer process.
Settle Your Trust
Determine Which Trust Type Is Right For You
Our office prepares many different trust types, based on our clients’s specific goals (tax minimization, asset protection, Medicaid eligibility), how much control you or your beneficiaries wish to exert over the trust, and which trust will best serve your intended beneficiaries. Below are the most popular trust types requested by our clients:
Revocable Living Trusts (RLTs): In an RLT, a Grantor transfers assets into a trust during his or her lifetime, retaining control as trustee (in a revocable trust). The main features of an RLT include avoiding probate, maintaining privacy, and allowing for seamless asset management during the Grantor’s incapacity or death. To create an RLT, the Grantor must settle (execute) it, fund it by retitling assets in the name of the RLT and appoint a successor trustee. Benefits include faster asset distribution to beneficiaries, avoidance of probate costs and delays, and potential estate tax or asset protection advantages in irrevocable trusts. While a revocable trust doesn’t provide creditor protection, it ensures flexibility and control for the grantor.
Marital (QTIP) Trusts: Grantors who settle QTIP trusts want to control how their assets are managed and distributed after their deaths while still providing financial support for their surviving spouses. Surviving spouses will receive all income generated by this trust annually. QTIP trusts are particularly useful for blended families, second marriages, tax planning, and ensuring the long-term protection of assets. In addition, the trust principal in a QTIP trust passes tax free to ultimate beneficiaries upon the death of the surviving spouse.
Disclaimer Trusts (DTs): Grantors settle DTs when they want to give the surviving spouse or other beneficiaries the option to refuse certain assets upon the Grantor’s death rather than having the Grantor lock-in that choice while he or she is still alive. A beneficiary who wishes to disclaim assets must do so within nine (9) months of the Grantor’s death, such a choice is irrevocable, and the beneficiary may neither own any part of the asset nor be able to direct who may receive the asset. Surviving spouses may receive assets in a DT so long as they comply with QTIP Trust requirements. Disclaimed assets are then transferred to the DT so that the trustee can control and use them for the benefit of other trust beneficiaries. Proper use of a DT allows for tax-efficient wealth transfer and creditor protection.
Key Trust Benefits
When it comes to settling a trust, choosing the right attorney ensures the process is smooth, efficient, and stress-free. The Law Office of Jason D. Jones, P.C. brings expert knowledge, attention to detail, and a personalized approach to managing every aspect of trust settlement. With our guidance, you can feel confident that your trust is being handled with the highest level of professionalism and care.
Avoiding Probate
Probate in the New York metro area is a costly, time intensive and long drawn out process that can take years to complete while Trust Settlement provides seamless transition of assets to beneficiaries.
Revocability
Trust settlement services streamline the process, reducing delays and ensuring timely completion of each step, from asset inventory to distribution.
Immediate Use
Once a trust is settled, it can be used by the Grantor to own, buy, and sell assets so that they can be held in one place.
Checks On Beneficiary
Grantors may place any number of restrictions or conditions that trust beneficiaries must satisfy before receiving their
bequests.
Tax Ease and Minimization
Grantors who use RLTs do not need to worry about how capital gains taxes will be assessed by the trust because RLTs are Will substitutes during life so any gains or losses in the trust will be reflected on the Grantor’s annual tax return.
Trustee Selection
Grantors may “test out” various trustees during their lives to ensure that only the most responsible trustees will manage trust assets upon the death or incapacity of the Grantor.
Irrevocable Life Insurance Trusts (ILITs): Grantors who settle ILITs and fund them with life insurance policies are able to exclude life insurance from his or her taxable estate. The ILIT must own the policy and the Grantor gifts cash to it to pay for trust premiums. A separate trustee manages the policy proceeds on behalf of heirs or estate beneficiaries. Also, the Grantor must survive for at least three (3) years after he settles the ILIT to avoid the policy proceeds from inclusion in their taxable estates.
Special Needs Trusts (SNT): A Grantor settles a SNT to set aside assets for the benefit of a disabled individual without affecting their eligibility for means-tested government benefits like Medicaid or Supplemental Security Income (SSI). The key benefits of an SNT include preserving the beneficiary’s access to these programs while supplementing their quality of life through trust-funded expenditures (e.g., housing, education, or recreation) that are not already provided by Medicaid or SSI. The SNT must be irrevocable, managed by a trustee, and funded with assets that do not belong to or are never directly given to the disabled beneficiary. Proper drafting ensures compliance with federal and state laws so that the disabled beneficiary is not disqualified from receiving vital Medicaid or SSI benefits.
Medicaid Asset Protection Trusts (MAPTs): Grantors who settle MAPTs in accordance with Medicaid rules preserve assets for heirs while qualifying for Medicaid. The Grantor loses control of the trust principal but may use the income so long as he does not exceed certain thresholds. There is also a five (5) month look-back period for Medicaid eligibility so if you are considering settling a MAPT, you should do so well in advance of your need for Medicaid to be shielded from look back scrutiny.
Integrity and Reliability
The team at the Law Office of Jason D. Jones, P.C. specializes in trust settlement, ensuring a seamless, efficient, and legally compliant process. We provide personalized service, mitigating potential conflicts and handling complex trust assets with expertise and care. Contact us today to experience peace of mind knowing your trust is in capable hands, ensuring the wishes of the Grantor are honored, and beneficiaries receive their trust bequests in the most efficient way possible.
