Key Takeaways:
- No single trust works for everyone in Tennessee — the right one depends on your goals and assets.
- A revocable trust can be changed during your lifetime; an irrevocable trust generally can’t.
- A Tennessee estate planning attorney can help you find the trust that fits your family.
Trent Linville, Owner and Lead Attorney at Linville Estate Law
What is the best trust for estate planning? There are four types to consider, and each has a different purpose.
Trusts are powerful estate planning tools that can help you manage your assets and make sure they’re distributed the way you want. One of the main benefits of using this estate planning tool is the ability to establish different types of trusts, each with its own set of rules and benefits. Today, we’ll take a quick look at the four main types of trusts to answer the question, “What is the best trust for estate planning for families in Franklin, TN?”
Revocable Trust
A revocable trust is a type of financial vehicle that allows you to change, amend, or revoke its status during your lifetime. As the grantor, you can change the terms if your situation or end-of-life goals change. Revocable trusts are often used to avoid probate, which is a court-supervised process that validates a will and distributes assets to your creditors and then beneficiaries. Since revocable trusts are not subject to probate, they can help you streamline your estate planning efforts. Franklin, Tennessee, home and business owners can establish a revocable trust at any time.
Irrevocable Trust
An irrevocable trust is, as the name suggests, permanent and cannot be changed once it’s established. This means that you permanently give up control and ownership of the assets placed into it. An irrevocable trust may also be used to reduce estate taxes since the property entered into the trust may no longer be part of your taxable estate.
Credit Shelter Trust
A credit shelter trust, sometimes called a bypass or family trust, is an estate planning tool designed to maximize estate savings for married couples. When the first spouse dies, the creator’s assets are transferred to the trust rather than to the surviving spouse. This means that if you die before your wife or husband, the assets in your trust don’t become part of their taxable estate. This can take a huge tax burden off your loved one. The primary drawback of a credit shelter trust as an estate planning tool is that your heirs don’t actually receive ownership of your property but instead an interest in the trust.
Irrevocable Life Insurance Trust
An irrevocable life insurance trust is another vehicle that you can’t change. What makes this different is that it’s designed to hold your life insurance policies. You transfer cash or other assets in the trust to pay your life insurance, and the money that goes into the trust at the time of your death is passed on to your beneficiaries tax-free. One reason you might consider an irrevocable life insurance trust is that it’s flexible and gives you control over the distribution of your life insurance proceeds. You can specify who you want trust assets distributed to, and this can give you peace of mind that your loved ones won’t be arguing over money when you die.
If you are looking for estate planning tools that can help you protect your Franklin, Tennessee, estate, as well as your loved ones, a trust may be a great option. However, there are different types of trusts, and no single option is ideal for everyone. For further guidance, click here to book a free discovery call, and let our experience help you come up with an estate plan that works for you and your family’s needs.
Linville Estate Law, PLLC offers estate planning, probate and trust administration, and other services throughout the Franklin, Tennessee, area. Linville holds a law degree from Belmont University College of Law and is a proud member of the Tennessee Bar Association, the Williamson County Bar Association, and the Maury County Bar Association. Linville also serves on the Spring Hill Board of Mayor and Aldermen. He chose estate planning as a way to help the members of his community best protect their loved ones.
