If you want to avoid the probate of your estate after your death, you can execute a Revocable Living Trust. A Trust has three (3) parties: the Settlor who is placing their property into the ownership of the Trust, the Trustee who manages the Trust property, and the beneficiary who receives the Trust property.
Typically a Revocable Living Trust has the same person as Settlor, Trustee and Beneficiary initially. The Trustee changes to the Successor Trustee in the event that the Trustee either becomes incapacitated or dies. The Beneficiary changes upon the death of the Settlor to the person(s) named by the Settlor as those entitled to receive the Trust property after the Settlor dies.
A Revocable Trust means that the Trust can be revoked or amended during the lifetime of the Settlor.
A Living Trust is funded during the lifetime of the Settlor. For example, real property is quit claimed to the ownership of the Trust, and bank accounts are changed to the ownership of the Trust.
Upon death the Successor Trustee pays the Settlor’s creditors, taxes, expenses of last illness and funeral expenses, does a final accounting to the beneficiaries, and then distributes the Trust property to the named beneficiaries.
Persons with special needs such as mental or physical disabilities that make them eligible to receive disability benefits, can be the beneficiary of a Special Needs Trust (SNT) also called a Supplemental Needs Trust (SNT). The SNT provides additional resources for extra care above and beyond what may be provided by government assistance. The quality of life for the beneficiary is enhanced. The SNT assets are protected from creditors, and government benefits cannot be decreased because of the existence of the SNT. Parents or other family members can leave assets to the SNT for the benefit of their disabled family member without affecting the eligibility of the disabled person for government benefits.
A Bypass Trust is an estate tax avoidance tool that can be used by a husband and wife. Upon the death of the first spouse the estate is allocated between a decedent’s trust and a survivor’s trust. The portion that goes into the decedent’s trust bypasses the estate of the surviving spouse, thereby reducing the value of the surviving spouse’s estate to a point where no estate tax is due.