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There are many things that can help you decide whether to create a trust as part of your estate plan.  Talking to an Alabama trust attorney is the best way to find out if one or more trusts can provide you advantages that are worth pursuing.

Trusts are an estate planning tool that can be created for a variety of benefits.  They can shield your assets from taxes, provide for minor or disabled children, give you flexibility in naming beneficiaries and heirs, and create a method for giving to charities.  One of the greatest benefits of trusts is the ability to avoid probate.  Depending on which kind of trust you choose, you can still retain a great deal of control over your assets throughout your lifetime, even if they’re placed inside the trust.

Different Kinds of Trusts

A trust is a financial tool that you (the grantor) create allowing a third party (the trustee) to manage and spend assets to benefit a person, group of people, or charitable cause (the beneficiary or beneficiaries). Trusts can be set up in several different ways and can state specifically when and how you want the assets (or income from the assets) to pass to the heirs and/or beneficiaries.  A trusts attorney can help you create a trust that meets your specific goals.

While there are several different kinds of trusts, they typically fall into two categories – revocable and irrevocable.

Revocable Trust

Also called a “living trust,” this kind of trust is created during the lifetime of the grantor and can be changed, modified or revoked at any time. The grantor usually serves as the original trustee of the grant.  This is a very useful tool to avoid probate.  A grantor can use a revocable trust to transfer the title of real property or assets to the trust.

This kind of trust can be dissolved at any time if a trustmaker’s circumstances or desires change. These trusts often become “irrevocable” when the grantor dies.  A grantor can make provisions for a successor trustee if he or she becomes incapacitated or dies. However, these trusts can be subject to estate taxes and will be treated as an asset during a person’s lifetime.

Irrevocable Trust

This type of trust can’t be changed by the grantor after it is created. While the absence of control is a drawback, the benefits may offset this.  By transferring the grantor’s assets out of his estate, it may place the assets out of the reach of estate taxes and probate. To reduce estate tax liability, this may be an option to consider. It could also shelter assets from legal judgments against a person, and it can be a part of Medicaid planning.

Other kinds of trusts include:

Charitable Trusts

These trusts benefit a particular charity or the public at large.

Special Needs Trust

These trusts are created to provide in the future for children or other family members with special needs.  A special needs trust is typically set up for a disabled person who receives government benefits so that they are not disqualified from continuing to receive those benefits.

Tax By-Pass Trust

This trust allows one spouse to leave money to another spouse while minimizing the amount of federal estate tax.

Constructive Trust

Also called an “implied trust,” this trust is set up by a court, which decides that even though no formal trust was declared, facts show that the asset owner intended that property be used for a certain purpose or be given to a certain person.

The Fiduciary Role of a Trustee

The grantor names a third party to act as trustee and administer the trust after the grantor’s death.  With revocable trusts, the grantor himself often serves as the original trustee.  The role of a trustee is an administrative one – referred to as a “fiduciary duty” — and they must carry out their role by following the instructions laid out in the trust document.

The fiduciary role of a trustee includes:

  • Maintaining records to establish that trust assets are appropriately managed and spent
  • Releasing this information to beneficiaries when requested
  • Fully following instructions and goals as delineated in the trust document
  • Paying federal and state taxes as required
  • Not treating trust assets or income improperly (such as misappropriation or fraud)
  • Avoiding conflicts of interest
  • Maintaining integrity and cognitive sharpness to fulfill the role of trustee.

When things go wrong, you need a trust litigation attorney

If arguments erupt between beneficiaries or you believe a trustee is not fulfilling their fiduciary duty, then it’s time to talk to an estate litigation attorney.  While we often hope that estate matters can be ironed out through discussions, sometimes they can’t.  Litigating in court is a tough and aggressive job, and not all estate lawyers are prepared to do it.  At Caldwell Wenzel & Asthana, we are.

Our legal team has years of experience in the courtroom, and we’re prepared to litigate on your behalf to achieve a favorable outcome.  A trust dispute lawyer is an ally and asset when things go wrong.  We have had enormous success in both probate and circuit courts and through mediation in matters concerning estate and trust litigation.  These issues can include:

  • Breach of fiduciary duties by executors, trustees, administrators, guardians, powers of attorney  and conservators, as well as defending against accusations of breach of fiduciary duties
  • Accounting proceedings to challenge or defend management of an estate or trust
  • Undue influence, will contests, and mental incompetence
  • Interpretation and construction of documents and validity of documents
  • Spousal rights proceedings to question or establish inheritance rights
  • Contests regarding appointment of guardians and conservators
  • Removal of trustees, executors, administrators, powers of attorney, guardians, and conservators, as well as defending against accusations concerning such removal.

If a trustee or beneficiary is exerting undue influence on an elderly family member, hiding or misappropriating funds, misrepresenting the instructions of the grantor, or engaging in other inappropriate behaviors, a trust litigation attorney can aggressively represent your best interests in court.

Contact a skilled Alabama trust attorney today

If you are in opposition to decisions being made about a trust for which you are a beneficiary or a trustee, or if you have been removed as a beneficiary, or your percentage of inheritance under the trust has been greatly reduced, then a phone call to a skilled Alabama trust attorney makes sense.  Gathering legal information and understanding your options is a critical first step.  The experienced trust litigation lawyers at Caldwell Wenzel & Asthana have helped countless families.  We can do the same for you.  Our client victories make our work worthwhile.  To find out more about how we can serve you, call us for a free initial consultation at (251) 444-7000.

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