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Trucks gather dust, gadgets become obsolete, and trendy clothes have a built-in expiration date. Cash loses value quickly, too,” said Shane T. Johnson, Esq., Attorney at Law and Counselor for Johnson Legal, PLLC. “If your children are expected to inherit a significant amount of money, it might not be in their best interests to have it all at once. But there is a solution—a gift that could last a lifetime.”
Provision for your children can be made through trust planning, which can be timed to correspond with life events like college, buying their first house, getting married, and having children of their own, or based on particular ages or dates.
The Gift of a Trust
A particular legal and fiduciary structure known as a gift in trust enables an indirect bequest of assets to a recipient. This kind of trust is frequently utilized to pass riches to future generations.
If you pass away while your children are still minors, you can create a trust with their children as beneficiaries. When assets are held in a trust with a trustee, it is possible to ensure that the financial needs of the minor children are satisfied and that the assets are safeguarded until the children are mature enough to handle them independently.
Types of Trusts
A living trust, also called a revocable trust, is established while the grantor is still alive and enables the transfer of assets to avoid probate after death. “Revocable” refers to the ability for the trust’s terms to be modified while the grantor is still alive. Revocable trusts are the most common type of trust.
An irrevocable trust is another option, Johnson noted. After the trust is established, its provisions cannot be altered or canceled, making the trust irreversible. The settlor of an irrevocable trust loses ownership of the assets and cannot change any of the provisions governing their management. An irrevocable trust offers the chosen trustee enduring power over the assets. Doing this could shield your assets from litigation and creditors and lowers your estate taxes.
A testamentary trust becomes active after the grantor’s passing, unlike an irrevocable trust, which can take effect during the grantor’s lifetime. This trust is mentioned and described in the decedent’s will and is made public throughout the probate procedure.
Which Trust Makes the Perfect Gift?
The language used to describe the differences between trusts can perplex someone who isn’t involved in estate planning or the legal profession, which is the biggest drawback of trusts.
Rather than spend too much time picking the perfect plan, Johnson said, it’s best just to get started.
“It may be challenging to begin estate planning, so many individuals put it off. Put the structure in place, but don’t let the worry that you might not know all of your plans stop you,” he said. “Your estate plan and trusts can be set up in various ways to allow for future alterations as your requirements and preferences change.”
The alternative, Johnson warned, is a gift no one wants to receive. Getting started now on an estate plan is the best way to show your love for your spouse and family members for years to come.
“The hazards of not having any preparations in place in the event of an accident or medical emergency may be disastrous. Therefore, most people find it comforting to know that there are plans in place,” he said. “Don’t forget that Uncle Sam will be your representative if you don’t have an estate plan.”
About Johnson Legal
At Johnson Legal, we understand that it is better to give than it is to receive. Let us give you exceptional legal service so that you can give your child a more secure future. Speaking with a Wilmington trust attorney about your plans will help you better understand your alternatives and decide what to do with your assets so that you can achieve your objectives for your children. Johnson Legal is located at 1213 Culbreth Drive, Suite 448, Wilmington, NC 28405.
About Johnson Legal, PLLC
Johnson Legal, PLLC, is an experienced estate planning law firm located in Wilmington, NC, and serving the greater Cape Fear area. Johnson Legal provides clients with compassionate and comprehensive legal services in the following areas: trusts, probate, business law, last will and testament, estate administration, advance care planning, special needs planning, and business succession planning.
