What Are The Different Types of Irrevocable Trusts?
There are a multitude of irrevocable trust types. It’s easier to categorize groups of trust types, which generally fall into two categories. First, there’s a group of irrevocable trust types that are established for tax planning purposes. Whether it’s to avoid estate tax, federal income tax, or other types of taxes, an irrevocable trust can be created using trust documents to reduce income tax liability.
The other types are those trusts used for asset protection. For example, if you want to protect your surviving spouse from exploitation in remarriage, there are spousal trust asset protection trusts for that purpose. If you’re looking to protect assets from a nursing home and benefit eligibility, there are types of trusts available for that purpose. If you’re looking to protect assets from potential lawsuit creditors, you can create irrevocable trusts for that purpose also. Irrevocable trusts can even be created for the purpose of protecting the beneficiary from his or herself if they’re not capable of prudently managing money.
What Are The Most Common Types Of Revocable Trusts?
The most common types of revocable trusts are those that someone creates during his or her lifetime to address the management of his or her assets upon incapacity or death, and for the purpose of avoiding probate court or guardianship court. Revocable trusts are typically viewed by the IRS as being tax neutral. These trusts do not protect assets from creditors.
How Can I Properly Plan My Estate To Protect It From a Beneficiary’s Bankruptcy Filing Or Even My Own Debts?
The types of documents you may decide to utilize in order to plan ahead could be a will or a living trust. You want to look at a trust that is established for your beneficiary upon your death for that beneficiary to receive the inheritance. This is typically called a testamentary trust. Testamentary trusts can be created in your will or can be created in your living trust. The testamentary trusts would need to have what is called a spendthrift provision. The spendthrift provision protects against spendthrifts and protects what you leave to the beneficiary from spendthrift behavior. It also protects the spendthrift from other people looking to attach, seize, or foreclose the assets you left them. In Florida, in order for the trust to be valid upon creation, there needs to be more than one trustee, if the beneficiary and the trustee are the same. You can’t have one person who is the sole beneficiary and also the sole trustee
Typically, a family trust is the name for what has been utilized as a credit shelter trust. A credit shelter trust is money that is set aside to preserve the estate tax exemption of the first spouse to pass away. It allows children to be beneficiaries, along with the surviving spouse. More often than not, the term family trust refers to a credit shelter trust used for tax planning purposes, but it can also be used for creating your own trust with dynasty type protection and longevity of distributions to your family.
For more information on Different Types of Irrevocable Trusts In Florida, an initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (904) 398-6100 today.
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