| Elizabeth McMaster Attorney & Counselor at Law, PLC |
Trusts:
Trusts can be categorized in a number of ways. A trust may be revocable or irrevocable, living, or testamentary, grantor or nongrantor,
funded or unfunded.
A revocable trust is a trust that can be altered, amended or revoked by the grantor (creator) of the trust. While an irrevocable trust cannot
be revoked by the grantor, the grantor may retain the power to make investment decisions and to control the distribution of income and
principal to the beneficiaries. Nevertheless, in most cases, the term "irrevocable trust" refers to a trust in which the grantor has
relinquished not only the right to revoke, amend or modify the trust, but also the right to exercise other powers.
A trust that is created during the grantor's lifetime is referred to as a living or inter vivos trust, while a trust that is established under a
testator's will use referred to as a testamentary trust. In most cases it will not make any difference whether the trust is a living trust or a
testamentary trust if the primary purpose of the trust is to provide for the administration of all or a portion of the decedent's assets for a
period of time after the decedent dies.
Why Use A Trust?
Trusts can be categorized in a number of ways. A trust may be revocable or irrevocable, living, or testamentary, grantor or nongrantor,
funded or unfunded.
A revocable trust is a trust that can be altered, amended or revoked by the grantor (creator) of the trust. While an irrevocable trust cannot
be revoked by the grantor, the grantor may retain the power to make investment decisions and to control the distribution of income and
principal to the beneficiaries. Nevertheless, in most cases, the term "irrevocable trust" refers to a trust in which the grantor has
relinquished not only the right to revoke, amend or modify the trust, but also the right to exercise other powers.
A trust that is created during the grantor's lifetime is referred to as a living or inter vivos trust, while a trust that is established under a
testator's will use referred to as a testamentary trust. In most cases it will not make any difference whether the trust is a living trust or a
testamentary trust if the primary purpose of the trust is to provide for the administration of all or a portion of the decedent's assets for a
period of time after the decedent dies.
Why Use A Trust?
- Avoid Probate
- Manage Assets
- Tax Savings
- Provide for Minors and Other Persons Under a Disability
- Provide for Spendthrifts
Special Needs Trusts
A Special Needs Trust ("SNT") refers to a trust set up for a disabled beneficiary which will avoid a period of ineligibility for certain
government benefits such as SSI and Medicaid and will also avoid the treatment of the trust as a resource for SSI or Medicaid eligibility
purposes. There are two types of SNTs: the Third-Party SNT and the Self-settled SNT.
Third Party SNT
A Third Party SNT is a trust set up and funded by someone other than the disabled beneficiary. In most cases, a parent or relative will set
up a third party SNT as part of their estate plan. This third party SNT allows parents and grandparents to bequeath part or all of their
estate to the disabled beneficiary while preserving the beneficiary's public benefits. This third party SNT can be included as part of a will
or a trust agreement. At the beneficiary's death, the property bequeathed can pass as designated in the will or trust agreement. A word of
caution; however: the trust must be written to clearly state the grantor's intent that distributions are to be made solely in the discretion of
the trustee and that the trustee is under no obligation to provide for the beneficiary's support or distribute funds directly to the beneficiary.
Self-Settled Trusts
There are two types of SNTs that allow the disabled individual to retain his or her resources in an SNT without those resources
disqualifying him from SSI or Medicaid benefits.
legal guardian, or court. The beneficiary must be disabled as defined by the federal SSI program. The trust must provide that any
remainder left in the trust upon the individual's death will be paid back to the state.
2. d(4)(C) "Pooled" SNT
This is a trust created and managed by a not for profit organization, such as Commonwealth Community Trust or Personal Support
Trusts (both operate in Virginia). A separate account is maintained for each beneficiary of the trust; however, the assets are pooled
together for investment purposes. This type of trust can be created by the individual's parent, grandparent, legal guardian, court, or the
individual himself. As with the d(4)(A) SNT, the trust must provide that any remainder left in the trust upon the individual's death will be
paid back to the state.
Links:
Virginia State Bar:
http://www.vsb.org/site/publications/wills-in-virginia
http://www.vsb.org/site/publications/
You Need a Will:
http://www.articlealley.com
A Special Needs Trust ("SNT") refers to a trust set up for a disabled beneficiary which will avoid a period of ineligibility for certain
government benefits such as SSI and Medicaid and will also avoid the treatment of the trust as a resource for SSI or Medicaid eligibility
purposes. There are two types of SNTs: the Third-Party SNT and the Self-settled SNT.
Third Party SNT
A Third Party SNT is a trust set up and funded by someone other than the disabled beneficiary. In most cases, a parent or relative will set
up a third party SNT as part of their estate plan. This third party SNT allows parents and grandparents to bequeath part or all of their
estate to the disabled beneficiary while preserving the beneficiary's public benefits. This third party SNT can be included as part of a will
or a trust agreement. At the beneficiary's death, the property bequeathed can pass as designated in the will or trust agreement. A word of
caution; however: the trust must be written to clearly state the grantor's intent that distributions are to be made solely in the discretion of
the trustee and that the trustee is under no obligation to provide for the beneficiary's support or distribute funds directly to the beneficiary.
Self-Settled Trusts
There are two types of SNTs that allow the disabled individual to retain his or her resources in an SNT without those resources
disqualifying him from SSI or Medicaid benefits.
- d(4)(A) SNT
legal guardian, or court. The beneficiary must be disabled as defined by the federal SSI program. The trust must provide that any
remainder left in the trust upon the individual's death will be paid back to the state.
2. d(4)(C) "Pooled" SNT
This is a trust created and managed by a not for profit organization, such as Commonwealth Community Trust or Personal Support
Trusts (both operate in Virginia). A separate account is maintained for each beneficiary of the trust; however, the assets are pooled
together for investment purposes. This type of trust can be created by the individual's parent, grandparent, legal guardian, court, or the
individual himself. As with the d(4)(A) SNT, the trust must provide that any remainder left in the trust upon the individual's death will be
paid back to the state.
Links:
Virginia State Bar:
http://www.vsb.org/site/publications/wills-in-virginia
http://www.vsb.org/site/publications/
You Need a Will:
http://www.articlealley.com
Trusts
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