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Home » 5 Ways a Trust Attorney Can Help You

5 Ways a Trust Attorney Can Help You

October 24, 2017Trust in Indianapolis

trust attorney

A trust attorney helps you to make use of trusts to protect your family and assets. Trusts are a common estate planning tool because they are both versatile and powerful. However, if you make the wrong kind of trust, financial disaster could result – especially if you do not discover the error until you are counting on the trust to provide you with benefits and protections. 

Frank & Kraft will help you to make a legally valid trust that is right for you and that accomplishes your goals. You should reach out to a trust attorney at our firm as soon as possible to find out if a trust should be part of your asset protection plan, your incapacity plan or your legacy plan. You can also read on to find out about five key ways a trust attorney at our firm can help you.

A Trust Attorney Helps You Leave an Inheritance to a Minor

If you leave money to someone who is not yet 18, and you haven’t made plans for how that money will be handled, the court may need to step in to appoint a guardian who is in charge of money management. After the child turns 18, the guardian will no longer be involved and the money will be handed over to a young person without any requirements, conditions or limitations. Both the appointment of a guardian and the transfer of an entire inheritance to an 18-year-old may be undesirable. Creating a trust allows you more control over who manages a child’s inheritance and when the child receives the assets to manage himself.

A Trust Attorney Helps You Provide for a Disabled Loved One

Leaving money or property to someone who is disabled could result in a loss of access to means-tested benefits like Medicaid. The use of a special needs trust can make it possible to provide financially for a disabled person without jeopardizing important benefits. You can also select a responsible person to serve as trustee and manage assets for the person who is disabled.

A Trust Attorney Helps You Protect Assets in Case of Incapacity

If you are incapacitated by an illness or injury, someone must manage your assets. If you have not made an incapacity plan, there will be a delay in managing your wealth as guardianship proceedings take place in court. The court may also appoint someone different than the person you would have preferred to manage your assets. If you make a trust and name a backup trustee, that backup trustee could take immediate control over trust assets if something happens to affect your ability to manage the assets on your own.

A Trust Attorney Helps You Protect Assets in Case You Need Nursing Home Care

When you need nursing home care, Medicare and most private insurers won’t pay unless you need skilled care. Nursing homes are very expensive, and you’ll have to pay privately if you don’t have Medicare coverage or another insurer covering your care. Medicaid does pay for a nursing home, but Medicaid is means-tested so ownership of too many assets disqualifies you. Certain types of trusts allow you to structure ownership of assets so you aren’t disqualified from getting Medicaid when you need it to pay for your nursing home.

A Trust Attorney Helps You Pass Assets Outside of Probate

The probate process can take around a year and sometimes longer depending upon the complexity of an estate. The long delay until heirs or beneficiaries take ownership of assets left to them could result in assets depreciating in value if they require careful hands-on management that an executor may not be fully capable of providing. Heirs or beneficiaries depending upon receiving an inheritance could also suffer financial hardship during the wait. Using a trust to allow assets to pass through trust administration instead of probate can make the transfer of assets much quicker, allowing you to avoid these problems.

Getting Help from A Trust Attorney

A trust attorney at Frank & Kraft can offer you the help you need in all of these situations and many more. To find out about the different ways our legal team can assist you with using trusts as part of your plans for the future, join us for a free seminar. You can also give us a call at 317-684-1100 or contact us online to talk with an attorney about whether a trust is right for you.

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Paul A. Kraft, Estate Planning Attorney
Paul A. Kraft, Estate Planning Attorney
Paul Kraft is Co-Founder and the senior Principal of Frank & Kraft, one of the leading law firms in Indiana in the area of estate planning as well as business and tax planning.

Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
Paul A. Kraft, Estate Planning Attorney
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Trust Administration Steps
To ensure that your estate doesn’t lose assets to federal gift and estate taxes you may need to include tax avoidance strategies in your estate plan. One estate planning tool that can provide tax avoidance benefits is a Grantor Retained Income Trust, or GRIT. Always consult with your estate planning attorney before deciding what tools to incorporate into your estate plan. In the meantime, however, the Indianapolis trust attorneys at Frank & Kraft explain how a Grantor Retained Income Trust works and why you might want to include one in your estate plan. What Is a GRIT? A GRIT is a specialized type of irrevocable trust that allows the Grantor (creator of the trust, also referred to as the “Settlor”) to transfer assets into the trust while retaining the right to receive all of the net income from the trust assets for a fixed term of years, referred to as the “initial term.” Income from the trust is distributed to the Grantor at least annually during the initial term. At the end of the initial term, the remaining principal is either distributed to the trust beneficiaries or remains in the trust for the benefit of those beneficiaries. The primary benefit of a GRIT is that if (this condition is important) the Grantor survives the initial term, the value of the principal held in the GRIT is excluded from the Grantor’s estate for federal gift and estate tax purposes. How Does a GRIT Help with Tax Avoidance? The tax avoidance benefit of a GRIT is found in how the value of the trust principal is determined because those assets are valued at a discount. The value of the discount depends on the length of the initial term of the GRIT, and the applicable federal rate in effect at the time the GRIT is established. The transfer of assets to a GRIT constitutes a gift equal to the total value of the assets transferred to the GRIT, less the present value of the retained income interest held by the Grantor for the initial term. If the Grantor survives the initial term, the assets comprising the GRIT will pass to the designated remainder beneficiaries at a reduced gift tax value. GRIT Beneficiaries Section 2702 of the Internal Revenue Code determines who you cannot name as a beneficiary in a GRIT. Excluded beneficiaries include your spouse, your ancestors or the ancestors of your spouse, any lineal descendant of yours or your spouse, any sibling of yours or your spouse, or the spouses of any of the foregoing persons. You can name lineal descendants of siblings, (nieces and nephews) relatives even more distant than nieces and nephews, or friends of yours or your spouse as beneficiaries of a GRIT. How a GRIT Works in Practice Imagine that you establish a 15-year GRIT and transfer $100,000 of assets into the trust and that the applicable federal rate is five percent. As the Grantor, you will receive the income from the GRIT during the initial term. The present value of the retained income interest is $66,007, making the value of the gift $33,993. If you survive until the end of the initial term, however, the remainder beneficiaries will receive $100,0000 plus all capital growth. Your estate, however, will only need to acknowledge a lifetime gift in the amount of $33,993 (the applicable value of the gift at the time it was made). Disadvantages of Using a GRIT Just like most tax savings tools and strategies, there are some disadvantages to relying on a GRIT. First, it is an irrevocable trust, meaning if your personal circumstances change, you cannot make corresponding changes to the trust. Second, if you do not survive the initial term the advantages gained by creating a GRIT do not apply. Contact the Indianapolis Trust Attorneys For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns about establishing a Grantor Retained Income Trust, contact the experienced Indianapolis trust attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
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