Skilled Virginia Attorneys Handling Trusts

What Is a Trust and Why Do I Need One?

A trust is an arrangement under which a person or institution, called the trustee, holds the title to property for the benefit of another person called the beneficiary. The person who establishes the trust is called the "settlor" or "trustor."

Often the settlor, the trustee and the beneficiary will, at least initially, be the same person. There are "living" trusts, which are set up while a person is alive, and "testamentary" trusts, which are set up in a will to become effective after a person's death.

A trust is an effective method for providing for asset management and protection of resources in the event of illness or incapacity. It is a particularly useful tool for larger estates with multiple or complex assets or where there is no close family member available to act as agent.

Contact the law firm of Jean Galloway Ball, PLC for skilled counsel in setting up trusts that are customized to your needs and goals. Schedule a confidential consultation with an experienced trusts and estate planning lawyer at our Fairfax law offices by calling 703-359-9213.

Living Trust

A trust created for the lifetime management of property is known as an intervivos or "living" trust. The trust can be revocable, that is, it can be amended or terminated at any time. The trust can be funded by titling accounts and assets to the trust, or left unfunded, depending upon state law.

In managing assets, trusts allow for continuity of management and centralization of record keeping. A living trust is not subject to court supervision, and can be used to avoid probate. Through use of "spendthrift" provisions, when the beneficiary is not the settlor, it potentially can protect assets from the claims of creditors of the beneficiaries.

Trusts can be used to minimize or avoid taxes, including:

• Life insurance trust
• Charitable remainder or lead trust
• Personal residence trust
• Settlor retained income trust
• Qualified terminable interest property trust (QTIP).

Where a spouse is not a U.S. citizen, our attorneys may recommend establishing a qualified domestic trust (QDT) is a useful, indeed necessary, tax planning strategy.

Estate Tax Planning

Congress substantially overhauled the estate tax scheme a few years ago. Below is a chart which shows the estate tax thresholds through 2013. As you can see, the exemption amount rose to $5 million in 2011 and 2012. However, as of January 1, 2013, the estate the exemption amount drops to $1 million. Though it is possible that Congress will tinker with this scheme between now and 2013, absent a crystal ball it is difficult to know exactly what will happen.

ESTATE TAX RATES

YEAR	ESTATE TAX CREDIT	HIGHEST ESTATE TAX RATES
2006	$2 Million	46%
2007	$2 Million	45%
2008	$2 Million	45%
2009	$3.5 Million	45%
2010	No estate tax or $5 Million	Modified step-up in basis or 35%
2011	$5 Million	35%
2012	$5 Million	35%
2013	$1 million	55%

 

An estate planning attorney at Jean Galloway Ball, PLC can help you plan a strategy to minimize estate taxes, as well as provide for disabled children or grandchildren and see that your wishes are carried out.

Contact us today for a confidential consultation with a lawyer experienced in trusts and probate.