Attorney TipsIssue No. 3 | January, 2022
ESTATE PLANNING
PART 2: TRUSTS
A Realty Trust is an instrument in which you deed ownership of real estate from yourself into a Trust. You can name yourself as Trustee, so you still have authority to sell, refinance and manage the property as you wish. You will designate beneficiaries who will take over ownership of the real estate after you are deceased.
Tip: Placing property into a Realty Trust offers several advantages:
1) The property is protected from certain liabilities and outside creditors.
2) It may reduce estate tax obligations for your estate.
3) It avoids the need for probate to transfer the property upon your death.
A Family Trust is like a Realty Trust except it holds personal assets. The Donor, as Trustee, is still able to amend the trust and access the assets.
Tip: Family Trusts are typically used when the Trustee has minor children and allow the Donor to tailor the Trust to the needs of the beneficiaries.
Benefits include:
1) Assets can be held until the beneficiary reaches a designated age.
2) The Trust’s assets can still be used for the benefit of the original Donor, and then towards the education and support of the beneficiaries at the discretion of the Trustee.
3) A Family Trust can be named as the beneficiary of retirement accounts or insurance policies.
An Irrevocable Realty Trust is best suited for older individuals who don’t foresee selling or refinancing the property in the near future.
Tip: An Irrevocable Realty Trust is similar to the Revocable Trust but for two main differences:
1) You relinquish a degree of control. Decisions regarding the property need to be approved by the beneficiaries.
2) It protects the property from claims made by nursing homes or Medicare once the property has been held in the trust for 5 years.
Have further questions or need to start your estate planning? Please give us a call!
Gilmore & Gilmore, LLC Danvers | Newburyport | Boston 978-777-3480
