Do I Need A Trust?

That’s a question estate planning attorneys frequently hear. Often, inquiries about trusts are associated with the perceived need to curtail taxes. However, since the federal tax exemption is currently $15,000,000 per person, the vast majority of families do not actually have to worry about estate taxes. Of course it is always smart to check on state estate tax laws, but know that 38 states do not collect estate taxes. Nonetheless, taxes aside, there may be compelling reasons to establish a trust. Read on for pointers from attorneys. 

Control, Protection, Appreciation Shifts…

Attorneys at Smith Debnam confirm that while “Taxes are the reason that applies to almost no one,” there are many reasons for lots of us to consider trusts, including: 

• Control: A trust lets you decide who receives property, when they receive it, and under what conditions. If you want your daughter to have access to her inheritance for education and health but not for a gambling habit or a bad marriage, a trust does that. A will does not.

• Protection: Assets held inside a properly structured trust can be shielded from a beneficiary’s creditors, from a divorcing spouse’s claims, and from a beneficiary’s own poor decisions. The money belongs to the trust, not personally to the person receiving distributions. That distinction matters enormously when things go sideways in someone’s life. 

• Appreciation shifting: The goal is…to make sure tomorrow’s growth belongs to your family rather than the IRS. If you own something that could be worth three times as much in ten years, getting it into the right structure now…is one of the most powerful things estate planning can accomplish.

Longer Lives: The Role of Trusts In Care Planning

Another good reason to consider establishing a trust is the trend toward living longer lives in an increasingly more expensive era. Estate planning is now as much about planning for our own care costs (and the care of loved ones) as gifting accumulated assets. 

In the face of aging and capacity declines, many families find that while they have worked and saved, they do not actually have the resources to fund their care. This is where the timely establishment of an irrevocable trust for the purposes of becoming Medicaid eligible can be life changing for families. Note, however, that a Medicaid Asset Protection Trust (MAPT) must be set up well in advance of when care is actually needed, as attorneys at Parman Law explain: 

A Medicaid trust can provide a pathway to future eligibility. You can divest yourself of assets in an effort to qualify for Medicaid, but you are ineligible for five years after you transfer assets out of your name. If you fund an irrevocable trust with income-producing assets, you would be able to accept distributions as long as you are living independently. This is key for people that rely on the income that is generated by their savings. With the Medicaid estate recovery mandate in mind, you can transfer your home into the trust as well. This would not impact your ability to live in the home rent-free as usual. After five years have passed, the assets in the trust will not count if you apply for Medicaid.

Good To Know: Trustee Bonds

When any type of trust is established, trustees are named to administer the assets in them, based on the arrangements specified in the trust agreement. Trustees have fiduciary obligations and are held to exceptionally high legal standards, “the most important of which are the duties of loyalty and care, and the duty to act in accordance with the terms of the trust agreement.”  

Given the seriousness of the role, trustee bonds can be required. Essentially, a trustee bond is a specific type of fiduciary bond that protects the interests of the trust and its beneficiaries in accordance with applicable state law. As a leading national provider of many types of fiduciary bonds, Colonial Surety Company makes it easy and efficient to obtain trustee bonds: Just get a quote online, fill out the information, and enter a payment method. Then, simply print or e-file the bond from anywhere. 

Quote and Obtain Trustee Bonds Here

Estate Law Practice? Eldercare? Probate Law?

All types of fiduciary and court bonds are just a few clicks away with The Partnership Account® for Attorneys from Colonial Surety Company. Once you’ve signed up, just:

• Log into your private dashboard
• Choose from our complete portfolio of fiduciary and court bonds
• Get a quote and send it to your client for completion, or go ahead and complete it on their behalf—the choice is yours.
• Download, print or e-file the bond. That’s it. 

Available fiduciary bonds include: administrator, estate, probate, personal representative, trustee, conservator, guardian and more. 

Court bonds include: appeal, supersedeas, TRO, replevin and many more. 

At Colonial Surety Company, we are national and direct bond writers. Our experienced team is here to help ensure you meet even the most detailed bonding requirements.

The Partnership Account® for Attorneys

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