Three common applications for trusts in estate planning

On Behalf of | Sep 11, 2015 | Estate Planning

Trusts enable people in Nevada to control or protect assets during their lives and after their deaths, often for the benefit of heirs. These legal tools have been developed to support many financial situations. Three common forms of trusts are revocable, irrevocable and special needs.

A revocable trust is sometimes referred to as a living trust. It establishes how assets will be managed. While the creator of the trust remains alive, the terms of the trust can be altered or revoked by the person. Upon the person’s death, the terms of the trust remain in force and direct the discharge of assets by the trustee. In contrast, an irrevocable trust serves people who do not anticipate a need for flexibility. In some cases it is set up to separate the assets of a high-value life insurance policy from the insured person’s estate and thereby avoid estate taxes and claims by creditors.

A special needs trust could be employed to manage assets meant to support a disabled person who needs lifelong support. Often this type of trust protects the beneficiary from losing government assistance like Medicaid and Supplemental Security Income. The trust contains the assets set aside to meet a disabled person’s needs instead of just giving the heir the assets, which might then disqualify the person from public assistance.

Every person has unique goals and needs when planning how to manage an estate. Consulting with an attorney familiar with trust planning could allow the person to make informed decisions about how to establish protection of assets. An attorney could advise the person on how to design the terms of a trust and then prepare the paperwork. Additionally, an attorney could update an estate plan periodically if the person’s financial situation changes or tax laws are altered.