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Estate Planning Options
While a Revocable Living Trust is the standard, specialized trust structures can unlock additional protections, tax savings, and planning opportunities.
An Asset Protection Trust (APT) protects the grantor's assets from the claims of creditors and lawsuit settlements. Grantors typically establish APTs to be irrevocable for a certain number of years to ensure the grantor is not a current beneficiary of the assets placed in the Trust.
An APT is usually structured to return the undistributed assets to the grantor after the Trust termination if there is no risk of the assets being claimed by a creditor or lawsuit settlement.
A Charitable Trust benefits a specific charity. They are created as a part of an estate plan to reduce or avoid gift and estate taxes. As a popular type of Charitable Trust, a Charitable Remainder Trust (CRT) can act as an effective financial planning tool that gives the grantor valuable financial benefits for a lifetime.
The CRT distributes income to the grantor or named beneficiaries for life or a term of years, with remaining assets passing to charity upon termination — making it both a charitable gift and a tax strategy.
Irrevocable Life Insurance Trust — remove the death benefit from your taxable estate while maintaining full control over how your beneficiaries receive the funds.
A Life Insurance Trust — often referred to as an Irrevocable Life Insurance Trust (ILIT) — is a specialized legal arrangement designed to hold your life insurance policy. It removes the death benefit from your taxable estate, protects the funds from creditors, and dictates exactly how and when beneficiaries receive the money.
How an ILIT Works
You establish the trust and name a third-party trustee. The trust becomes the legal owner and beneficiary of your life insurance policy.
You gift money into the trust annually. The trustee uses those funds to pay the insurance premiums on your behalf.
Upon your passing, the death benefit is paid to the trust. The trustee distributes funds to beneficiaries per your exact written instructions.
Key Benefits
The death benefit is removed from your taxable estate entirely — shielded from federal and state estate taxes so beneficiaries receive every dollar.
Because the trust owns the policy, funds are protected from lawsuits, bankruptcy, or divorce settlements that could otherwise reach your beneficiaries.
You decide how and when money is distributed — incremental payouts at certain ages, funds earmarked for education, healthcare, or long-term care.
Some beneficiaries of Trusts receive government benefits. Once named a beneficiary of a Trust, the beneficiary can lose the government benefits unless a grantor establishes a Special Needs Trust.
Considered legal because it follows the rules created by the Social Security system, a Special Needs Trust prevents the beneficiary receiving government benefits from having any control over the distribution of assets — preserving their eligibility for Medicaid, SSI, and other programs.
Established to prevent a beneficiary from selling or pledging a Trust's financial assets, a Spendthrift Trust is a popular financial planning tool for controlling the spending of an irresponsible heir.
In a spendthrift trust, the named beneficiary receives full asset protection from creditors until the Trust releases the assets at the legally documented time — giving grantors peace of mind that their hard-earned assets won't be squandered or seized.
A grantor sets up a Totten Trust by depositing money into an account set up at a financial institution. The grantor uses their name as the trustee for the benefit of a beneficiary. This type of Revocable Trust does not release assets until the grantor dies or releases the assets while still alive.
No Probate Required
When the grantor dies, the assets remaining in the Trust do not go into probate — they pass directly to the named beneficiary, making it one of the simplest probate-avoidance tools available.
Our experienced estate planning attorneys will help you determine the right trust structure to protect your family, minimize taxes, and give you peace of mind.
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