How Does a Family Trust Protect Your Assets?
There are several ways to protect your assets, and preserve them for your heirs. One way to do that is through a family trust. When someone decides to set up a family trust, it is meant to benefit their relatives. It is meant to specifically benefit the person’s family, which can include blood relatives, relations by marriage, or relations by law, in the case of adoption. These can be revocable or irrevocable trusts and are essentially a subcategory of living trusts.
What is a Family Trust?
Essentially, in a family trust, the grantor no longer owns the assets in the trust but can use them for as long as the trust lays out. There is usually a benefit to no longer owning the asset to the family. For instance, it may be useful to protect assets from creditors. An example of this would be placing the family home in a family trust in order to protect it from a failed business venture. They can also be used to set aside money for things such as a child or grandchild’s education. Ensuring that your children will receive the assets is another reason to use a family trust. They also allow your estate to manage claims from former partners, should that happen.
Instituting a Family Trust
In order to institute a family trust, you have to first create and execute a trust agreement document. This document will list the beneficiaries, name a trustee, and provide instructions on how to manage the assets.
The second step involves transferring assets into the trust. Deeds, titles, and other assets must be put into the trustee’s name, as put forth by the grantor. Without this step, a trust document is ineffective.
It is important to choose someone you trust, who will carry out your wishes without taking advantage of the situation.
After your death, an irrevocable family trust will also protect your assets from Medicaid Estate Recovery, which is essentially the government going after your assets to pay back what they paid for you. Since the assets are in the name of the trust, there is nothing for Medicaid to go after.
Thinking carefully about who should have the power to appoint and remove the trustees and who the initial trustees will be is advised, as they will be responsible for managing the trust properly. Whoever has the power to appoint and remove trustees should appoint a person in their will to take over the role after they die.
An improperly set up trust can rack up costs and administrative fees.
Contact The Mattar Firm
If you are looking into setting up a trust, consult with a dedicated asset protection attorneys at The Mattar Firm to help ensure you are not running into some of the issues mentioned above. Our attorneys will help you make the best decisions for yourself and your family. Call us today at 239-222-2222 or 844-444-4444.