Virginia Beach Estate Planning Attorney Discusses Why Trusts Are Still Important
Virginia Beach, VA (Law Firm Newswire) February 29, 2016 – An estate-planning method that was one time frequently used was an irrevocable trust that held a life insurance policy, with the objective that the death benefit be used to pay estate taxes.
This technique permitted the policy’s benefits to be applied toward payment of the estate taxes of the individual who died without inclusion of the policy in the estate.
Although this method remains useful, it is not as common because the threshold for being affected by the estate tax has increased to such a degree that only the affluent have cause for concern. Nevertheless, trusts are still a popular estate-planning vehicle. Irrevocable trusts, which cannot be modified after they are created, have diminished in use, but revocable trusts, which are governed by the grantor, are prevalent.
“Trusts are a valuable estate planning tool that can be instrumental in safeguarding the grantor’s assets and in ensuring that the grantor’s heirs are financially secure,” said Andrew H. Hook, a prominent Virginia estate planning attorney with Hook Law Center with offices in Virginia Beach and northern Suffolk.
A trust can be established with several types of property, including cash, real estate, life-insurance proceeds and securities. A trust is often used to provide income and bequests to the grantor’s heirs, or trust beneficiaries, in such a way that it acknowledges distinctions among the heirs. One possibility is that the trust could provide only for the surviving spouse until the death of that spouse, and subsequently, for the children and grandchildren. Or the trust could simultaneously provide for the spouse and children.
Payments could be made from the trust when the children reach specific ages, or when certain events occur. For example, funds could be applied toward college tuition, or graduate or professional school. Or payments could be made at the time an heir gets married or has a child. Trusts can also be used as a way to have the grantor’s assets professionally managed. As the grantor becomes advanced in age, there may be a reduction in the level of confidence regarding financial matters, and an increase in the need for an experienced trustee, who can serve as an adviser and as someone who makes decisions concerning how the assets are to be handled.
Furthermore, trusts are used for asset protection. The trustee is usually the legal owner of the trust property, and the heirs are beneficial owners. When the beneficiaries lack the right to demand the property, the beneficiaries’ creditors have no access to the assets. Creditors and estranged spouses of heirs are unable to reach the assets.