A trust is an estate planning device that can serve a variety of uses. They can be set up to avoid probate, qualify or avoid disqualification for public benefits, preserve assets, protect privacy, control assets, and reduce estate taxes. Please contact me if you are interested in discussing a trust as part of your estate plan.
Types of Trusts – trusts are broken down into revocable and irrevocable.
- Revocable Probate Avoidance Trusts
- The main purpose for revocable trusts is to avoid the probate process. By transferring real estate and other significant assets into the trust, the assets can be distributed shortly after death without any court oversight.
- Irrevocable long term care trusts
- Irrevocable trusts are commonly used to protect real estate and qualify for Masshealth. The benefit of this type of trust is it allows the elder to live in the home, and once the lookback period is satisfied, the assets in the trust are not factored into the elder’s eligibility for Masshealth. Additionally, if the elder needs to sell the house, it is still eligible for the $250,000/$500,000 exemption in capital gain for a primary residence. Assets in an irrevocable trust also avoid the probate process.
- Realty Trusts
- Special Needs Trusts
- Special Needs Trusts (also known as Supplemental Needs Trusts) are trusts for disabled individuals. The purpose of these trusts is to provide a source of funds to supplement, but not take the place of, public benefits that have income and asset limits. If set up correctly, the trust can provide goods and services that SSI and Masshealth do not offer. They can revocable or irrevocable. A
- Estate tax planning
- Estate tax planning trusts utilize exemptions in the tax law to reduce or avoid estate taxes.