What Are The Different Types Of Trusts? What Are Their Purposes?
A trust can be set up for any purpose, except an illegal purpose, but they are most commonly used for transferring property from one generation to the next and avoiding probate. They are particularly useful for people who have a number of titled assets, including real estate or many heirs who are set to receive different real estate assets. There are different ways to pass property, including through what is called a quitclaim deed. With a quitclaim deed, the person ‘quits’ their claim on the property and the other person then owns it immediately. With a Transfer on Death Deed, the owner holds on to the property through their lifetime but passes their ownership to another person after death. In many cases, the best way to transfer the property is through a Trust because transfers of land need to be in writing and recorded with the county recorder’s office. A transfer to an individual means the individual owns the land, and the land will need to be transferred again to the next individual. But a transfer to a Trust will not have to be transferred as frequently, because it is the Trustee that changes and then the Trustee controls the land.
When a trust owns property, the property within the trust doesn’t need to go through probate. Moreover, the designation of a successor trustee would mean that the court doesn’t need to look at what happens with that property; it would simply be distributed according to the trust creator’s wishes.
A Trust can also work well if your family is a blended family. Many couples come in and set up what we call mirror wills, each spouse’s will leaves everything to the other spouse, and if not the spouse, then to the children. But after the first spouse passes, the second spouse is free to change their will any way they want, maybe disinheriting a stepchild. A Trust can be set up to avoid these situations.
Special needs trusts and supplemental needs trusts can be established for beneficiaries who have a disability and are under the age of 55. The purpose of these trusts is to allow the disabled beneficiary to continue to maintain the government benefits to which they are entitled. The trust would cover quality-of-life items which the government benefits don’t cover. The primary difference between the supplemental needs trust and special needs trust has to do with who funds the trust. The funds can come from the either disabled beneficiary themselves, perhaps from a lawsuit or an inheritance, for a Special Needs Trust, or established by another party for a Supplemental Needs Trust.
How Often Should We Review Or Update Our Estate Plan?
A person should review or update their estate plan anytime there is a big change in their life, such as the birth of a child or grandchild, or the acquisition of a property. It should also be noted that many people are informed by other people’s experiences or what they see in the news; if something touches a person or raises questions for them, they should ensure that their estate plan reflects their needs.
When a child hits a milestone, such as starting kindergarten, middle school, high school or college, those are also good times to review your Estate Plan and make sure it still meets your needs. A kindergartner has very different needs then a college student. People change as well, maybe the sister you trusted to be the guardian of your children has married somebody your children don’t like. Your plan should change.
For more information on Different Trusts And Their Purpose In MN, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (763) 284-5552 today.