Chances are, you’ve heard of trusts. You may know that trusts are used for estate planning but have a very vague idea of how they actually work. In fact, even people who have formed a trust may not realize the little known benefits of trusts. We will look at just three of those benefits in this article.
#1 – Some trusts can exist for hundreds of years.
A dynasty trust, also known as a perpetual trust, is designed to last for a very long time. In some states, the trust may be designed to last forever or for 1,000 years. However, many dynasty trusts are structured to last for a certain period of time after the last beneficiary who was alive when the trust was formed.
#2 – Trusts can help beneficiaries remain eligible for government benefits.
This estate planning tool may be a great way to support any loved ones with special needs without affecting their eligibility for benefits like Medicaid. In Minnesota, a supplemental needs trust may be created for the benefit of a disabled person.
Typically, a special needs or supplemental needs trust can be used to pay for reasonable living expenses and other basic needs. Often, the amount received in government benefits fails to completely cover a beneficiary’s needs.
#3 – Trustees can manage your property if you become incapacitated.
Yes, trusts can be used for incapacity planning. Let’s say you put most of your assets into a revocable living trust. You also sign a pour-over Will that transfers additional assets to the trust upon your death. However, your Will offers nothing in the way of incapacity planning.
A trust, on the other hand, is different. When you establish the trust, you can either serve as trustee and name a successor trustee. If you become unable to manage the trust, your successor can step right in.
However, you can also opt out as trustee and name someone else to take on that role. Then, your incapacity takes a lesser role because the trustee is already managing the trust.
Will These Little Known Benefits of Trust Benefit You and Your Loved Ones?
At Virtus Law, we assist clients in developing comprehensive estate plans, including trusts. To schedule an appointment with one of our estate planning attorneys, contact us at 612.888.1000 or send an email to info@virtuslaw.com. Our main office is in Minneapolis, with other offices located in Maplewood, Cambridge, Edina, Mendota Heights, and Red Wing.