The Toney Law Firm Areas of Practice
Estate Planning
Why Create a Trust?
Some common purposes of trusts are as follows:
- Administration Expense and Tax Planning.
A trust drafted for this purpose will minimize any Estate tax liability. A trust can also greatly reduce administration expenses as property in a trust will avoid probate which can be a lengthy and expensive process - Spendthrift Protection.
Trusts may be used to protect one's self against one's own inability to handle money. It is not unusual for an individual to create an inter vivos trust with a corporate trustee who may then disburse funds only for causes articulated in the trust document. These are especially attractive for spendthrifts. In many cases a family member or friend has prevailed upon the spendthrift/settlor to enter into such a relationship. These trusts prevent the beneficiary from assigning or levying the income or principal of the trust to creditors. - Asset Protection.
Asset protection allows a person to divorce himself or herself personally from the assets he or she would otherwise own, with the intention that future creditors will not be able to attack that money, even though they may be able to bankrupt him or her personally. One method of asset protection is the creation of a discretionary trust, of which the settlor may be the protector and a beneficiary, but not the trustee and not the sole beneficiary. In such an arrangement the settlor may be in a position to benefit from the trust assets, without owning them, and therefore without them being available to his creditors. - Wills and Estate Planning.
Trusts frequently appear in wills. A fairly conventional will often leaves assets to the deceased's spouse (if any), and then to the children equally. If the children are under 18, or under some other age mentioned in the will (21 and 25 are common), a trust must come into existence until the contingency age is reached. The executor of the will is (usually) the trustee, and the children are the beneficiaries. The trustee will have powers to assist the beneficiaries during their minority.