If your trust is revocable, or cancelable, you can be your own trustee. However, creating an irrevocable trust, or one that can’t be changed or canceled, comes with its own benefits.
Many people choose to use testamentary trusts because they can reduce the size of their estates. While this may not sound desirable, it can actually bring huge benefits when it comes to probate. In Arizona, small estates can use an affidavit to exempt themselves from the probate process altogether. The limits for a small estate in Arizona are $100,000 in real property (real estate) and $75,000 in personal property (everything else.)
REVOCABLE LIVING TRUSTS
As the name suggests, this type of living trust can be changed or canceled as you see fit. Revocable living trusts are also often called inter vivos trusts. This type of trust offers flexibility for the testator, along with other benefits. Assets passed through trusts don’t need to go through probate, which helps avoid delays and disputes, as well as protect everyone’s privacy.
Trusts can also reduce how much of your estate is reduced due to taxes. You can be the trustee of your own revocable trust, but not of an irrevocable trust. But revocable trusts don’t offer protection from your creditors like irrevocable trusts. To learn more about which type of trust is right for you, call to schedule your free consultation at (602) 609-7000.
IRREVOCABLE LIVING TRUSTS
Irrevocable trusts are permanent, and can’t be amended or canceled once you’ve created one. You also can’t be the trustee of your own irrevocable living trust. Once an asset is contributed to an irrevocable trust, the testator won’t have control or access to that asset for the rest of their lifetime. Irrevocable trusts can help avoid several types of tax liability for the estate. They also protect any asset contributions from your creditors.
Because you can’t change your irrevocable trust once it’s executed, it needs to be done correctly. More than likely, you will need an estate planning attorney to help you create an irrevocable trust. Get the expert guidance you require with our Arizona estate planning team at 480-833-8000.
SPECIAL NEEDS TRUSTS
One of the benefits that trusts offer is that they allow you to specify how your contributions should be used, if desired. They can also offer benefits that wouldn’t be available through gifting and other forms of transfer. A perfect example of this is a special needs trust.
A special needs trust allows you to financially support a loved one with a physical or mental illness or disability. Support provided through a special needs trust won’t exclude the recipient from receiving public assistance benefits like Social Security, Supplemental Security Income, Medicaid, and Medicare. These forms of assistance can require that a person be under a certain income level to qualify, and other forms of transfer can disqualify the recipient from receiving aid.
You can set up a special needs trust to begin before you pass away. They are irrevocable trusts, so you will need to assign someone other than yourself as the trustee. This also means that funds contributed to a special needs trust can’t be seized by creditors, and are safe from lawsuits. You can also use a similar instrument called a supplemental needs trust to pay for any expenses not covered by social assistance. If you want to create a special needs trust for someone you love, contact our firm to speak with one of our estate planning professionals.
Another common expense many of our clients want to set aside money for is a family member’s education. Higher education is becoming increasingly necessary for careers in certain industries, and it is also becoming increasingly expensive. If you want at least some of your estate to be used for your children’s or grandchildren’s college, trade school, or other education, consider using an educational trust. This type of trust can either go into effect while you are still living, after you pass away, or after you pass away and your beneficiary begins accruing educational expenses.
One of the obvious benefits of an educational trust is that your beneficiary has to use it on education, instead of squandering it on something wasteful. An educational trust can be revocable, so you can name yourself the trustee of the educational trust until you pass away. You can also name more than one person as the beneficiary of an educational trust, and decide how you would like the funds to be split between them. Our experienced Arizona estate planning attorneys offer expert guidance in creating educational trusts at affordable rates.