Three Things You Didn’t Know a Trust Could Do
The beauty of a trust is that it allows the grantor to control assets while putting them outside the reach of taxes and creditors, both during life and after death.
There are various and sundry purposes for a trust. You may wish to provide for the care of a child or other loved one with special needs. You may want to create a foundation for a charitable purpose. Or you may simply desire to avoid probate by having your estate be distributed by a trustee rather than under a will.
Whether or not you’re familiar with estate planning, you may be surprised at the versatile ways a trust can be used. Here are a few examples.
1. Put limits on spendthrifts
If you have relatives that are awful at managing their money, you may feel that leaving them a large lump sum is an invitation for them to fritter it away.
A spendthrift trust allows you to leave assets to such a relative but also to control how they are used and spent. This type of trust can be well-suited for a youthful beneficiary or one suffering from such problems as alcohol, drugs or gambling. The trustee, typically a trusted friend or relative, can manage the assets, invest them and decide when and how much to pay out. Or, depending on the terms of the trust, the trustee may hand it all over once the beneficiary reaches a certain age, has become financially responsible or meets other conditions.
The same idea applies to “special needs trusts” for loved ones with disabilities or special needs, which can be structured to limit payouts in order to preserve eligibility for benefits.
2. Provide care for pets
Many of us have beloved pets who will accompany us into our later years. In fact, it is a well-publicized finding that people with pets live longer. They’ve helped keep you around, so perhaps you want to help keep them around after you are gone. This is what a pet trust does. It allows you to set aside assets to care for your pet, much like a spendthrift trust allows you to care for a financially irresponsible relative.
3. Preserve and enhance your gun rights
Guns aren’t for everyone. Some people, such as felons can’t own them. And some guns, such as those specified in the National Firearms Act, cannot be held by individuals. A gun trust can hold your legally owned firearms and name contingent beneficiaries to enjoy use or ownership of those firearms if they are legally eligible. Also, an NFA gun trust may allow you to own otherwise prohibited firearms and accessories, such as automatic weapons and silencers, though you’ll need to cross reference local, state, and federal gun laws to make sure.
Trusts are seldom one-size-fits-all. They generally must be tailored to fit your needs. In the Mesa, Arizona area, estate planning attorney Joseph M. Udall is skilled at personalizing trusts for a multitude of purposes. Call 480-500-1866 or contact us online for a free telephone consultation. Saturday and evening appointments are available.