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Estate Planning


Considering the myriad of trusts available, creating the right estate plan can seem daunting. However, that is what we, as estate planning attorneys, do every day. We know the laws and will design a plan which addresses your specific situation. Here is a look at the basics of ten different types of trusts to provide you with a general understanding of the options available.

There will not be a quiz at the end. When we meet, all you need to do is be prepared to share your goals and insight into your family and financial situation. From there, we will design a plan that incorporates the best documents for your situation.

1. Bypass Trust

Commonly referred to as a credit shelter trust, family trust, or B trust, a bypass trust contains a portion of a deceased spouse’s accounts and property and uses the deceased spouse’s lifetime exclusion amount to reduce or eliminate estate tax. Because the estate tax is calculated at the first spouse’s death, this trust is bypassed for estate tax purposes at the second spouse’s death.

2. Charitable Lead Trust

A charitable lead trust provides a stream of income to a charity of your choice for a period of years or a lifetime. At the completion of the period of years, or at death, the rest goes to you or your loved ones with significant tax savings.

3. Charitable Remainder Trust

A charitable remainder trust provides a stream of income to you for a period of years or a lifetime. Then, it gives the rest to the charity of your choice with significant tax savings once the period of years or death has occurred.

4. Special Needs Trust

A special needs trust allows you to provide money or property for the benefit of someone with special needs without disqualifying them from receiving governmental benefits. Federal laws allow special needs beneficiaries to receive certain types of benefits from a carefully crafted trust without defeating eligibility for government benefits.

5. Generation-Skipping Trust

A generation-skipping trust allows you to distribute your money and property to your grandchildren, or even to later generations, without taxation, by using your lifetime exemption to offset any tax that could be due.

6. Grantor Retained Annuity Trust

A grantor retained annuity trust is an irrevocable trust which provides you with an annuity for a specific amount of time based on the value of the property in the trust. Upon completion of the annuity period, the remaining money and property is transferred to those you have named. You may use this type of trust to make large financial gifts to loved ones of accounts or property that are expected to grow in value at a higher rate than the annuity rate being paid back to you.

7. Irrevocable Life Insurance Trust

An irrevocable life insurance trust is designed to own high-value life insurance and receive the payment of the death benefit upon the trustmaker’s death. The benefit of this type of trust is that the life insurance proceeds are excluded from the deceased’s estate for tax purposes. However, the proceeds are still available to provide liquidity to pay taxes, equalize inheritances, fund buy-sell agreements, or provide an inheritance.

8. Marital Trust

A marital trust protects accounts and property for the surviving spouse’s benefit. It also qualifies for the unlimited marital deduction. These accounts and pieces of property are excluded from estate tax at the first spouse’s death but are included in his or her estate for tax purposes.

9. Qualified Terminable Interest Property Trust

A qualified terminable interest property trust initially provides income to the surviving spouse. Upon the surviving spouse’s death, the remaining money and property are distributed to other named beneficiaries. However, the trust still qualifies for the unlimited marital deduction. These are commonly used in second marriage situations and to maximize estate and generation-skipping tax exemptions and tax planning flexibility.

10. Testamentary Trust

A testamentary trust is a trust created in a will. This type of trust is created upon the individual’s death. It is commonly used to protect the money and property on behalf of a beneficiary as opposed to transferring the money and property to the beneficiary outright. You can use this type of trust when a beneficiary is too young to manage their own money or property, has medical or drug issues, or may be incapable of responsibly managing their own money.

The trust can also provide asset protection from lawsuits, or a claim by a divorcing spouse brought against the beneficiary. Unlike a revocable living trust or an irrevocable trust, where property should be transferred into a trust during the trustmaker’s lifetime to work property and avoid probate, testamentary trusts require the sometimes lengthy and expensive probate process before the trust is created.

Discuss Your Estate Plan Options With Our Modesto Estate Planning Lawyers

There are many different types of trusts available. We know estate planning can feel overwhelming. We will help you select which trusts, if any, are a good fit for you.

Call us today at (209) 522-2211 to schedule your in-person or virtual appointment. You can also contact us online. We are waiting to hear from you.

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