New Hampshire Living Trusts Lawyers
A trust is a legal entity that can hold property. People doing estate planning often use trusts for various purposes. The most common is to avoid probate procedures. A revocable living trust is the type that is created during a person’s lifetime and can be changed at any time. The idea is that all of your assets are transferred into the trust. In the trust itself you write down how the assets will be transferred when you pass away. Then, when you pass away, it is technically the trust that owns the assets, not you. The probate process can be costly and time-consuming. So instead you pass all of your assets on to your loved ones much more smoothly.
Grantor, Trustees and Beneficiaries
The trust gets its name because the money is held by one person (the “”trustee””) on behalf of another person or group of people (the “beneficiaries”). The grantor is the person who sets up the trust in the first place. This only sounds complicated but in many cases the grantor, trustee, and beneficiary is all the same person. In other words, you can establish a trust, put all of your money and property into it, and name yourself as the trustee and beneficiary. Upon your death, the beneficiaries would become whoever you name.
Revocable v. Irrevocable Trusts
You can change the terms of a revocable trusts at any time. An irrevocable trust, on the other hand, is final. The main advantage of a revocable living trust is that it allows you to continue to use your money and property as you wish with no limitations. For the majority of people, this is ideal. The revocable living trust gives you complete control during your lifetime. However, it gives your family the benefit of avoiding probate after you pass away.
Why would you ever make an irrevocable trust?
On the other hand, in more complicated situations, usually involving very high net worth individuals, an irrevocable trust has advantage. One is that is that the trust may protect assets from potential creditors because you no longer can control assets you place into the irrevocable trust. A second is that it can help avoid estate taxes. As of 2019 the estate tax exemption (including lifetime gifts) is $11.4 million for an individual and therefore $22.8 million for married couples. Thus, the vast majority of people are not fortunate enough to have to worry about federal estate taxes. Some states have much lower limits but New Hampshire has no estate tax and so New Hampshire residents don’t need to worry about that part of it.
Another time when lawyers may use of an irrevocable trust is to do “Medicaid Planning”. If a person has to go into a nursing home at the end of their life, Medicaid will not pay for their care until they spend down all of their assets. The idea is to try to take assets out of your name before you have to go into a home. This gets extremely complicated and there are all kinds of rules and techniques, advantages and disadvantages. It is best to talk to a New Hampshire Medicaid Planning lawyer if this is something you are thinking about.
Funding the Revocable Living Trust
It’s amazing how many people set up a revocable living trust but never put their assets into it. A revocable living trust does absolutely no good if you don’t put anything into it! Once you establish the trust it is important to transfer all assets into it including real estate, bank accounts, and vehicles.
If Cohen & Winters prepares your revocable living trust we also can assist you in funding the trust as an additional service we provide.
Regardless, even if you are confident you have all of your assets into the trust, it is always necessary to have a simple will as a backup. This protects you in various unexpected situations such as if e you acquire assets shortly before you pass away and didn’t have a chance to put them into your trust.
Contact the Lawyers at Cohen & Winters About Helping You Prepare a Revocable Living Trust
If you do not have a will please contact our office to set up a free consultation with one of our estate planning lawyers. We would be happy to discuss how we can help you with this critical document.