Boston Trusts Lawyer
Trusts are an important tool in estate planning law, one that allows you to look out for the needs of your loved ones and to protect the assets you have worked so hard to accumulate. While at first glance a trust may seem a tool only for the wealthy, it can in fact be useful in a variety of situations. If you have minor child, a trust can be used to control assets passed down to your children so the money can be spent on their education and not be squandered by them in a short period of time.
At Infinity Law Group, our firm provides a comprehensive set of estate planning services, including wills and trusts. We have extensive experience in helping clients protect their assets and their families, experience we can use to assist you with all of your estate planning needs.
Is A Will Not Good Enough?
A will is one of several important tools in smart estate planning. However, a will does not offer enough protection in a wide variety of circumstances. Even the best will cannot protect your estate and your heirs from the heavy burden of both state and federal taxes. Even if your assets are mainly in the form of property or insurance, a trust can still provide much-needed protection that a will cannot.
Our firm will assist you in creating a comprehensive estate plan, one that includes not only a will, but all the other tools necessary to protect your estate. Each estate is different, which is why there are numerous trust options and estate planning methods to choose from. We will use our training and understanding of Massachusetts estate law to create a plan that will protect you, your family and your estate.
What Is a Probate, and Should I Consider a Trust?
Probate is the legal process of transferring ownership of assets after ones death. Probate assets are such things like a bank account or a stock certificate. If a person dies owning probate assets, a legal proceeding in the Probate Court will be necessary to transfer these assets to the individuals names in the decedents will. This can be a very lengthy and expensive procedure.
A trust is one of the tools that may be used in order to avoid probate. The person who will be creating the trust is called the “Donor” and the person who is entitled to benefit from this trust is called the Trust’s “Beneficiary.” A trust will also name a “Trustee” who is responsible for the control of any assets transferred to the trust and manages those assets for the Beneficiary.
With a properly drafted and implemented trust, one will be able to avoid probate, and also have assets managed during your children’s lifetimes, if necessary.
Which Assets Do Not Go Through Probate?
- Property held in joint tenancy: A jointly owned asset will transfer to the surviving spouse or whomever the property was jointly owned with.
- Assets with named beneficiaries: This includes insurance policies, IRAs and annuities (as long as the beneficiary is alive).
- Assets transferred into a trust. This will help eliminate the need for your assets to go through probate.
Types of Trusts
Some of the trust you may use for your estate include:
- Charitable Trust
- Realty Trusts
- Living Trust
- Special Needs Trust
- Asset Protection Trust
- Irrevocable Trust
- Totten Trust
- Tax By-Pass Trust
- Resulting Trust
- Testamentary Trust
- Spendthrift Trust
As you can see, the options are quite varied. Each of these trusts is created with a specific goal in mind, giving you an opportunity to protect your estate and to take care of those that matter most to you.
What Makes A Trust So Effective?
At its most basic, a trust involves putting assets into the hands of a trustee to be used for a beneficiary. There are a wide variety of trusts, but the general goal behind them is fairly similar. They are designed to protect assets from excessive taxation and allows you more control over the trust funds than a simple will would.
Some of the main benefits of a trust include:
Whatever goes through the probate process becomes public record, meaning everyone can see what you have handed down to your beneficiaries. While for some people this is not a big deal, for other families it is not desirable. A trust can often bypass probate and keep the assets out of the public eye.
Protecting An Estate
If the trust is well-structured, it should be able to protect your estate from a wide variety of potential issues. If your heirs have creditors that may go after the estate, a trust may be able to prevent if from happening. If you have an heir that is not good with money, a trust can help protect the heir from wasting the inheritance.
Larger estates require more tools for controlling what happens with the assets. A trust can be created that allows you to retain control of the assets while you are still alive. You can also determine the time frame of all distribution of assets and you can control exactly who will get what.
Recovering Damages When a Trust Has Been Mismanaged
Before you can recover damages you will need to prove that trust mismanagement has occurred. You will generally need to prove that the trustee did not act in the best interest of the trust beneficiaries. For example, you may be able to prove that the trustee had a conflict of interest and acted in the best interest of someone other than the beneficiary.
After you prove that trust mismanagement has occurred, you will next need to show how you were harmed by this trust mismanagement. This will often require financial experts who can reasonably predict what would have occurred to the trust assets if they had been properly managed by the trustee. The court will generally award you damages for the amount the trust would have made but for the mismanagement by the trustee. In some cases, criminal charges may also be brought against the trustee.
Special Planning for Disabled Children
If you have a disabled child who’s receiving any federal or Massachusetts state government benefits, chances are, if you or anyone else leaves them an inheritance, they will become disqualified for those benefits. Any needs-based benefits such as Supplemental Security Income (SSI), MassHealth, or subsidized housing which imposes an income or asset limit on the individual receiving those benefits will see the inheritance as an asset that will disqualify the individual from those benefits for a certain amount of time or until the assets are spent down.
Government benefits, however, are notoriously underfunded and provides the individual with the minimum required to live. You, as a parent, want more for your child and that’s where a Special Needs Trust comes in.
What Is a Special Needs Trust?
A Special Needs Trust is a specific type of trust that is set up for disabled children usually by their parents or grandparents for their benefit. This trust will hold money or an inheritance for their benefit without disqualifying them from their government benefits. How is this accomplished? Well, the trust money is not controlled by the child or individual receiving the income from it. They don’t get a say on when and how much they get. That decision gets left to a third party – a trustee. Since the child or individual has no control over the money, it is not considered a countable asset for governmental benefit purposes.
In doing your estate plan, think about any disabled children you might want to benefit and set up a Special Needs Trust for them. Also, if you know of any grandparent or aunt who is thinking of leaving money or property to your disabled child, let them know that leaving the money or property outright to them will disqualify them from government aid and that they should set up a Special Needs Trust as well.
Massachusetts Pet Trusts
Many of us have pets and we treat them as part of the family. So when you did your estate plan (assuming you did one and if not, what are you waiting for?) and you thought about things to give to your spouse, kids, grandchildren, etc., did you think about your pets? Probably not. In fact, most people do not.
We’ve heard about Pet Trusts in other states and in the news (Leona Helmsley) and you might think that that’s a good idea for your pets. Unfortunately here in Massachusetts, a Pet Trust is not an option because there is no statutory authority to create one.
A pet trust traditionally is when a sum of money is left to a pet. The beneficiary of the trust is the pet and there is a caretaker/trustee that manges the trust and takes care of the pet. Massachusetts defines pets as personal property and therefore, you can’t leave money to your pet, just as you can’t leave money to your toaster. Someone should tell our legislature that our pets are not simply property – they’re our loving companions and best friends. When was the last time you snuggled with your microwave?
What Massachusetts Pet Trusts Do
We can still create something that we call a “pet trust” but it won’t be a pet trust in the traditional sense. In the Massachusetts version, instead of designating the pet as the beneficiary, you would name the caretaker/trustee as the beneficiary of the trust with a duty to own and take care of the pet.
What Is the Difference?
In the traditional pet trust, the caretaker has an obligation to take care of the pet because the pet is the beneficiary of the money in the trust. In the Massachusetts ad hoc version of the pet trust, the caretaker is the beneficiary so they really can do whatever they wish with that money – including not taking care of your pets.
Until the legislature statutorily authorizes the creation of pet trusts here in Massachusetts, we will all have to suffer the uncertainty that comes with setting up the ad hoc version of the pet trust. It’s still better than nothing.
Act Relative to Trusts for the Care of Animals
In the past, if someone who lived in Massachusetts wanted to leave money for a pet in case they were to pass away, the only way they could do it was by leaving the money outright to someone and hope that that person will take care of the pet. That person was not obligated in anyway to spend the money on the pet and no one could hold them accountable.
Governor Patrick signed into law on January 7, 2011, An Act Relative to Trusts for the Care of Animals – in other words, pet trusts. The law will not take effect until April 7, 2011.
The law stipulates several things:
- Any pet trust must terminate upon the death of the animal or animals that it was create to provide for;
- A judge could lower the amount of money left in trust for the pet if the amount is unreasonably large (think Leona Helmsley);
- If the trustee, the person who’s responsible for the care of the animal as directed by the trust, does not do their duty, then any later beneficiary of the trust may sue them or anyone who is caring for the animal may sue the trustee; and lastly
- Pet Trusts are exempt from the rule against perpetuities.
So if you have a pet in Massachusetts and if you are setting up an estate plan with your attorney, make sure to ask about whether a Pet Trust is right for you and your pets.
Let Infinity Law Group Assist With Your Estate Planning
Trusts can be extremely useful in a wide variety of situations, but you need experienced legal guidance to employ them effectively. At Infinity Law Group, we have worked with many clients from all walks of life to plan their estates. We are intimately familiar with all types of trusts, and we can use our knowledge to help you employ exactly the trust and other estate planning tools necessary to look after your estate.
Our firm offers free initial consultations to clients interested in estate planning services. During your consultation, we can discuss your estate and your plans for the future. We can help you determine what your next steps should be. With our help, you should be able to maximize the protection of your assets and your estate. Let us help you protect what you have worked so hard to accumulate. Contact us now to discuss your estate planning needs.