When planning for your future and your family’s future, you should be informed of all your potential options and think carefully about what estate and family wealth preservation planning strategy works for you. Having a living trust in Tennessee can bring a lot of security to you and your beneficiaries after you pass.
Individuals in Nashville, Avondale, and surrounding areas of Tennessee craft various plans and instruments to protect their assets and protect their family’s interests.
Knowing the difference between revocable and irrevocable trusts can only help you throughout your life. It also protects your loved ones if you become incapacitated or when you pass away. The revocable and irrevocable trust attorneys at Martin Heller Potempa Sheppard, PLLC represents clients in need of revocable and irrevocable trusts throughout Williamson and Davidson Counties, and throughout Tennessee.
Trust Attorney in Nashville, TN: Choosing Between Revocable and Irrevocable Trusts
Trusts hold assets, while wills keep assets in your own name. Trusts let you have access to property throughout your lifetime and can be used to distribute or hold the family wealth for a spouse, children, or other named beneficiaries.
Upon your death, a living trust in Tennessee can help to avoid the probate of the estate. It can also protect your family wealth against a new spouse, creditors, divorce, and avoid expensive estate taxes. Depending on the type of trust, you may be able to maintain control over the assets during your lifetime. Trusts allow a person to reduce estate tax liability, protect their assets, and avoid the costs of probate proceedings.
A “grantor” creates a revocable trust and a “trustee” controls it. In most cases, the same person is both the grantor and the trustee. A married couple may decide to have a joint revocable trust where they are both the grantors and the trustees. As the trust is revocable, the grantor may revise it as he or she desires in the future. One of the primary purposes of a revocable trust is to avoid the costs and lengthy proceedings in probate court. At the same time, a protected trust keeps the assets available for the family’s use during probate court.
Grantors, like their name suggests, cannot change irrevocable trusts. These trusts transfer ownership of assets permanently. Inter Vivos irrevocable trusts are often for transferring wealth among family members in a way that helps protect the family wealth. People considered “outsiders,” like creditors and ex-spouses, are examples of those who trust to protect wealth. Irrevocable trusts are also for minimizing future estate tax burdens.
How to Establish a Trust in Tennessee?
To establish a revocable or irrevocable trust in Tennessee, there are steps and elements the creator must understand.
- The grantor must sign a written trust document that details: the operation of the trust; appoints the trustee; and identifies the beneficiaries that will receive assets from the trust.
- In the case of a revocable living trust, the grantor often acts as the grantor, trustee, and beneficiary. This is because he/she retains control and benefits from the trust’s assets during the course of his or her life.
- In contrast, an irrevocable trust in Tennessee appoints a separate trustee, or multiple trustees, to control the trust assets under stipulated guidelines contained in the trust agreement.
This process may seem complicated, which is why we recommended you work with a revocable or irrevocable trust attorney. A lawyer can guide you in the right direction and ensure you’re making sound choices for yourself and your beneficiaries.
Types of Trusts
Some examples of irrevocable trusts in Tennessee include:
- Irrevocable gift trust, that is used by the client to transfer family wealth for a spouse, children, and grandchildren, but keep the wealth protected;
- Irrevocable life insurance trusts, that can transfer ownership of life insurance policies into a trust, removing them from a grantor’s taxable estate;
- Qualified personal residence trusts, that can transfer a grantor’s residence into a trust, removing it from the grantor’s taxable estate;
- Grantor retained annuity trusts, under which a grantor receives annual payments for a certain amount of time, and at the end of the specified term, the remaining assets pass to beneficiaries in an estate tax favorable situation; and
- Charitable remainder trusts, generally distribute a fixed percentage of trust assets to the trust beneficiary, which can include the grantor, the grantor’s spouse, and the grantor’s children, for a specific amount of time, after which the remaining assets are distributed to a charity. Charitable remainder trusts can create an income tax charitable gift deduction for the grantor when created. The charity does not receive any assets from this trust until many years later.
Revocable or Irrevocable Trusts
Deciding if a revocable or irrevocable trust is right for you involves careful consideration and:
- Review of your family situation
- The makeup of your family wealth
- A desire for control of the family wealth
- Who should ultimately receive the assets
Many people think that it would make sense to make all trusts revocable to maintain control. However, there are advantages and disadvantages to both forms. Consulting with an experienced revocable or irrevocable trust attorney who can help examine your options can be important in making sure your goals are met.
Why Hire a Revocable/Irrevocable Trust Attorney in Tennessee?
Deciding what to do with your estate can seem overwhelming, to say the least. That’s why you need a skilled revocable or irrevocable trust attorney in your corner. They will walk you through the laws in your state, assess your goals, and establish a trust that balances legal mandates with your personal needs.
Here’s what a trust attorney in Nashville ,TN can do for you.
- Make sure the trust is valid and legally binding.
- Workaround complications like previous marriages, divorces, and minor children.
- Protect your loved ones in case of a breach of trust.
Discuss Your Wealth Preservation Goals with Our Tennessee Trust Attorneys
The wills and trusts attorneys at MHPS can devise family wealth preservation strategies and revocable and irrevocable trusts for people throughout Williamson and Davidson Counties, and throughout Tennessee. If you need legal guidance in establishing a trust, be it revocable or irrevocable, or other family wealth and estate planning services, contact us online or call (615) 800-7096 to arrange a consultation.