Estate Planning and Protection Law: Trusts can protect assets beyond the scope of a will
By Nancy Brumback, Contributing Writer
Marlborough – If you’ve never considered creating a trust because you think trusts are only for multi-millionaires, think again.
Trusts can preserve assets, control where assets go, ease your heirs’ access to funds, and protect privacy, said Robert Ryan, an attorney with 18 years experience in tax law and estate planning, who has a private practice, Estate Planning and Protection Law, in Marlborough.
“A lot of people don’t know they have options when drafting trusts,” he said.
The first step in estate planning, he noted, is to make sure the basics—incapacity documents and death documents—are in place. Incapacity documents include a power of attorney, a health care proxy and living will, and may include a trust. Death documents are a will and a trust to administer assets. Couples with minor children should create a trust to control the disposition of assets and to pick who oversees those assets to avoid the need for a court-appointed conservator for the children.
But those documents are only the beginning of effective estate planning.
Trusts, Ryan said, can preserve the full benefit of estate tax exemptions. Most people think they don’t need to worry about those exemptions because their assets do not exceed the current federal tax exemption of $5.25 million per person.
Ryan pointed out, however, that the Massachusetts estate tax exemption is only $1 million per person, and that includes the value of real estate, retirement assets, and insurance proceeds. A trust can be structured to remove certain assets from the value of the estate of the surviving spouse.
“Owning assets jointly is not the same as trust planning,” he added. “If all the assets go to the survivor, the estate does not get the benefit of the $1 million tax exemption for the first person who dies. A trust can provide the surviving spouse with the benefit of that estate tax exemption.”
Other important functions of trusts can be to provide for children if a spouse remarries, to provide for heirs with special needs, to specify how family real estate will be handled, or to protect an inheritance from outside creditors, for example, if an adult child is in a difficult marriage.
“There are ways to benefit a child through a trust which don’t allow the assets to be easily attached. You can also provide supplemental money to benefit a child who needs government benefits,” he said.
Leaving assets outright to a child through a will or having a joint account with an adult child, he added, is not enough to provide those kinds of protection. “If you put your child on accounts as a joint owner, you expose your accounts to their creditors. Create a trust, put assets in there. The trustee takes over when you die, and, depending on the structure of the trust, the assets may not be subject to a beneficiary’s creditors.”
Spending the money now to set up a complete estate plan can save court and administrative costs later, Ryan said.
Trusts may also provide quicker access to the funds. “Even if someone has a power of attorney, a bank or financial institution may be reluctant to deal with that person. There is no question if they are dealing with a trustee.”
Ryan’s legal practice focuses on estate planning matters, and he makes presentations to other attorneys on these topics through various bar associations.
Ryan urges people to talk to a professional and create an estate plan that benefits them and their heirs. “If you don’t do anything, the state has an estate plan for you.”
Ryan’s office is at 225 Cedar Hill St., Marlborough, and he also meets with clients in their homes. For additional information, call 508-459-8509 or visit his website, www.estateplanprotection.com.
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