Memphis attorney Vincent Perryman discusses Trust Law with Angela Lawson

Memphis attorney Vincent Perryman discusses Trust Law with Angela Lawson and what Trust Law pertains to. Trust Law is a valuable estate planning tool. Trusts breakdown into two separate categories, revocable trusts in Memphis and irrevocable trusts in Memphis.

Revocable trusts are trusts that can be undone or revised. These are used for creating wills or a living trust. Irrevocable trusts cannot be undone. Once you have given the gift to the trust, it cannot be taken back.

Both revocable trusts and irrevocable trusts include four common elements:

• Settlor or Grantor - this is the person that has the assets to be put into the trust.
• Beneficiary - the person that will receive the assets in the trust.
• Trustee - the person picked by the grantor or settlor that manages the trust and distributes the assets to where the grantor or settlor wanted them to go. They are governed by a set of rules that are outlined in the Trust document or state law.
• Trust Document - the document that outlines the duties of the trustee, lists the powers of the trust, and says what should be done with the assets.

Why would someone need a trust setup in Memphis? A trust has a lot of benefits. A revocable trust will help with estate planning in Memphis, they are private and don't usually go through probate in Memphis like a regular will would and the Trustee is able to facilitate the trust without having to go to court regularly. Sometimes there will be a trust in a Memphis will. If someone has a sizable estate and they want there estate to be kept secret a trust will prevent the public from seeing what was in the estate. A will is a public document and anyone can see what is in it. As a settlor of a trust, as long as you are alive, you are the trustee for the trust until your passing. Then a successor trustee steps in and the trust becomes an entity.

A trust is more expensive than just a standard will because a trust has to be setup as its own entity. The belongings within the trust have to be retitled in the name of the trust. Transfer documents have to be filed in order to fund the trust as well. Without these retitlings of assets the trust may become an unfunded trust.

In revocable trusts there is also an additional item, a pour over will. A pour over will is a document setup in a trust to help protect any assets that did not get included in the original trust formation. The pour over will pull these assets into the trust upon passing of the settlor or grantor.

When establishing an irrevocable trust, Memphis attorneys look at the assets an individual has and what they would like to do with them. Once an irrevocable trust has been established the assets outlined in it cannot be removed from it. Irrevocable trusts do not allow the grantor and the trustee to be the same person. This is important to note because the irrevocable trust, once setup, becomes its own entity and now has to file its own tax return for the assets contained within the trust. It will have a separate tax id and be a separate entity to the IRS and government.

Some irrevocable trusts include:

• Special Needs Trusts - trusts setup for an individual that has some form of disability.
• Spend Thrift Trusts - trusts setup to take care of individuals that do not have financial responsibility. So the trust will prevent them from spending the money all at once.

When selecting a trustee it is important to find someone that is trust worthy because they will be responsible for managing the trust belongings after you pass.

Special needs trusts are designed to help take care of people with long term or permanent disabilities. In most cases, special needs individuals qualify for government assistance. This government assistance sometimes has regulations on how many assets the individual receiving the assistance can own. A Memphis attorney can help setup a trust where the trustee can distribute the money to the special needs individual without giving them a lump sum and disqualifying them for government assistance. The trust contains the lump sum of assets or cash and is not considered an asset for the special needs individual.

Sometimes in a nursing home neglect case a lump sum of cash will be awarded to an elderly individual and instead of the money going directly to the individual it will paid to a trust so the influx of assets does not disqualify the elderly individual from receiving their government benefits.

Another popular trust is an irrevocable life insurance trust or ILIT that is funded by life insurance. This is a trust that a life insurance policy is placed in and the trust becomes the owner of the policy. This may cause an issue because there is a three year look back period. If the individual that is covered by the life insurance policy dies within the three years of putting the life insurance policy in the trust it becomes taxable by estate, federal and state taxes. A way around this is to fund the trust enough to have the trust purchase the life insurance policy for the individual and it then avoids the three year look back period and now is not considered in the estate and therefore is not taxable under the same laws.