Experienced Memphis Trusts Attorney Provides Sound Counsel
Tennessee attorney prepares legal instruments to meet a variety of needs
Many people are looking for ways to secure their wealth and distribute their assets in the manner that they choose. At Parham Estate Law, I provide personalized guidance to clients based on their unique circumstances. Trusts can be used for many purposes. Many people use revocable trusts to bypass the probate process when allocating property upon death. Others create trusts to protect wealth claimants, fund charitable causes and lower their tax liability. As a Memphis trusts attorney serving clients throughout Tennessee, Mississippi and Arkansas, I can advise you on how to take full advantage of the protections trusts offer.
What is a trust?
Trusts are legal entities created to hold and transfer property under the management of a trustee. The person who establishes the trust and names the trustee is called the grantor. A person or organization that receives assets from a trust is called the beneficiary. Trusts provide benefits, such as shielding your financial assets from losses due to liability and taxation, so your beneficiaries can keep more of what you pass down to them. You can serve as both grantor and trustee, but whoever the trustee is, they must abide by the rules of the trust, because violations can lead to legal penalties and personal liability.
Revocable trusts can help you avoid probate and achieve your goals
A revocable trust, also called a living trust, is an effective estate planning tool. Because it is revocable, you have the power to revise the terms or revoke the trust entirely at any time. This type of trust is also useful for transferring your assets to your desired beneficiaries after death.
The proper creation of a revocable trust can help ensure that your estate is settled without going through the time-consuming probate process. It also ensures that the administration of your estate is kept private, unlike probate proceedings which are public.
A revocable trust can also benefit yourself during your lifetime. You can help establish what should be done if you should ever become incapacitated. You may name a trustee who will be empowered to make financial and/or health care decisions on your behalf.
When you meet with me, we can discuss your estate planning goals and whether a trust should be part of your comprehensive estate plan. I can inform you of the benefits and potential pitfalls of different types of trusts so that you are able to make a fully informed decision about the best way to move forward.
Establishing a trust versus executing a will
You can use a trust instead of a will to shift property to loved ones once you die, but you should understand the differences between the two options. Assets held in trust transfer automatically to the named beneficiaries. There’s no waiting for court approval, so your beneficiaries can access the property immediately, if that is your wish. Distributing assets via a trust can also keep the details of your estate confidential, unlike the public probate process that is used for wills. Some opt for a trust because assets can be held in the trust and dispersed over time, according to a schedule and conditions you create. Thus, you can give someone an allowance if you believe they cannot be trusted with large sums of money. You could also arrange money to be kept within a trust so that the recipient can remain eligible for government disability benefits. Another distinction is that you can direct the trustee to release assets if the potential beneficiary reaches a particular milestone, such as graduating college or maintaining sobriety, to receive benefits.
How to know if you need a trust
Not everyone needs the protections or advantages of a trust. But you can certainly benefit if you:
- Would like to avoid probate
- Own and operate a business as a sole proprietor
- Have sufficient wealth to trigger the federal estate tax
- Want to place conditions on a bequest to a beneficiary
- Prefer to give an allowance to a beneficiary, rather than a lump sum
- Have complicated legacy concerns, such as children with different partners
- Anticipate needing help handling finances in the future
I can review your financial holdings and discuss your family circumstances to determine if a trust is appropriate for you.
What type of trust is best?
There are several types of trusts, and each has its advantages and potential drawbacks. My firm assists clients with all types of trust, including:
- Revocable trusts — As the grantor of a revocable trust, you can retain control of your assets during your lifetime and may dissolve or revise the trust at any time. Living trusts are a popular form of revocable trust.
- Irrevocable trusts — Once you establish an irrevocable trust, you cannot regain control over the assets within the trust, and you cannot amend the trust without your beneficiary's consent. However, any appreciated assets in the trust are not subject to estate taxes.
- Credit shelter trusts — Also called bypass or family trusts, credit shelter trusts can be contained in a will or revocable to trust to allow for the full utilization of a person's federal estate tax exemption.. The assets in the credit shelter trust are not subject to future estate tax, no matter how much the assets of the trust grow.
- Generation-skipping trusts — Also called a dynasty trust, a generation-skipping trust enables a grantor to transfer a substantial amount of tax-free funds to family members at least two generations younger than them. It can be an excellent way to provide a legacy for your grandchildren.
- Qualified personal residence trusts — A QPRT prevents the value of a grantor’s primary residence or vacation home from being added to their estate. Establishing a QPRT may help someone stay under the estate tax threshold.
- Irrevocable life insurance trusts — This type of trust creates a mechanism to hold and/or distribute the proceeds from the grantor’s life insurance policy.
- Qualified terminable interest property trusts — A QTIP trust helps grantors in second marriages provide for the lifetime needs of a second spouse while preserving a legacy for children from a previous relationship.
- Special needs trusts — If someone in your family has special needs, this type of trust can be used to provide financial support now and in the future.
- Pet trusts — Many pet owners worry about who will take care of their animal in their absence. By establishing a pet trust, you can name a responsible person as trustee and devote funds to provide for your dog, cat or other animal companion.
Trusts are very flexible instruments. My firm can help you create one that achieves your present and long-term goals. I also counsel clients who want to augment their asset protection by reviewing existing financial arrangements and recommending ways to reduce exposure to liability.
Can I change my trust?
Generally speaking, a grantor can modify a revocable trust at any time, but must have the permission of the trustee and beneficiary to modify an irrevocable trust. In such matters, it’s best to consult a knowledgeable trust attorney for reliable counsel based on the particular circumstances.
Contact a skilled Tennessee trusts lawyer also serving clients in Mississippi and Arkansas
Parham Estate Law serves clients throughout Tennessee, Mississippi and Arkansas who wish to protect and distribute their assets by creating a trust. Call me at 901-602-3361 or contact me online to schedule a consultation at my Memphis or Jackson office.