Types of Trusts in Missouri
Planning the fate of your estate after you pass away is important not only for your own peace of mind but for the good of your family in the future. You can prevent your loved ones from having to deal with dividing up your estate using certain estate planning documents. One of the most common tools used is a trust. To safeguard your family and assets for the future, partnering with an experienced estate planning lawyer in St. Louis is essential. They can help you identify the right type of trust tailored to your needs, ensuring peace of mind for you and protection for those you care about most.
What Is a Trust?
A trust in estate planning law is a legal document that details how an individual’s assets should be distributed or managed after his or her death or incapacitation. A trust can allow surviving beneficiaries to avoid probate court, which can be a lengthy, expensive and stressful legal process.
With a trust, an individual (called the grantor) names a trustee, or someone who will be put in charge of managing the grantor’s assets or estate should the grantor pass away or become incapacitated. The trustee legally must follow the instructions laid out in the trust document. A trust allows an individual to retain control over how his or her assets are distributed.
Revocable Living Trust
In Missouri, many different types of trusts can be created to address an individual’s particular needs. One of the most common is a revocable living trust. This type of trust is created during the grantor’s lifetime and can be changed or revoked at any time. It is a popular choice because it allows the grantor to adapt the document based on changing circumstances throughout his or her lifetime.
A “revocable” trust means that the grantor can give power to a trustee with the option to alter or undo the trust at any point prior to the grantor’s death. This includes changing the beneficiaries, adding or removing assets, or dissolving or terminating the trust entirely. A revocable trust is the most flexible option. However, the downside is that estate taxes can be applied to this type of trust upon death because the IRS considers the assets to be part of the grantor’s estate.
Irrevocable Living Trust
An “irrevocable” living trust cannot be changed once assets and beneficiaries have been added. It also cannot be terminated, even if the grantor wishes to dissolve the trust. While this type of trust does not offer the flexibility of a revocable living trust, it comes with tax savings. The IRS generally excludes assets placed in an irrevocable trust from the grantor’s taxable estate. The assets in an irrevocable trust are also protected from creditors.
Testamentary Trust
Unlike a living trust, a testamentary trust only comes into effect upon the death of the grantor. It is a type of trust that is built into a grantor’s will. For example, if a will states that the grantor wishes for a trust to be created for minor children, this will result in a trust being created for dependents who need financial support according to the grantor’s wishes after his or her death.
Special Needs Trust
A special needs trust is specifically suited for the long-term care of a person with disabilities. It enables an individual to continue to financially support a person with disabilities (such as a child or family member) without affecting government benefits. Assets placed into a special needs trust do not count toward the beneficiary’s assets for government programs such as Medicaid or Supplemental Security Income.
Discuss Trusts With an Estate Planning Attorney in Missouri Today
While these are the most common types of trusts used to protect and allocate assets in Missouri, there are also other options available, including a charitable trust, asset protection trust, bypass trust, spendthrift trust, life insurance trust, multigenerational trust and pet trust. The best way to ensure the protection of your family and estate after your passing is by working with a qualified trusts lawyer in St. Louis to determine which type of trust is right for you.