What is an Estate Trust?
An “estate trust” is a type of trust specifically created for the benefit of the creator’s surviving spouse. In an estate trust, the assets of the trust are to be transferred to the estate holder’s spouse. State laws may vary on the restrictions on these types of trusts, but they generally qualify the deceased person’s spouse for a very favorable marital deduction. As such, estate trusts are sometimes referred to as “marital deduction trusts”.
What Are the Benefits of an Estate Trust?
The main benefit of an estate trust is that it generally allows a person to transfer the entirety of their estate to their surviving spouse upon death, without the transfer being subject to any type of property tax. In fact, this is probably the main reason why people choose to use an estate trust. They basically allow the surviving spouse to avoid paying hefty taxes on the transfer.
In addition, creating an estate trust also has the benefit of preventing various challenges to the way that the deceased person’s property is distributed upon death. Instead of having the property pass through questionable state probate procedures, the property is mostly passed on to the surviving spouse. They can then decide what to do with the property, which may be good since they are likely to be familiar with the desires of the deceased person with regards to the property.
How Are Estate Trusts Created?
An estate trust needs to meet the basic requirements of any trust, which include:
- A statement of the names of the parties involved, such as the “trustee” (the person responsible for the transfer of the property) and the “beneficiary” (which in this case, is the person’s surviving spouse
- A specified listing of the estate assets to be held within the trust- this can include real property deeds, monetary funds, stocks/securities, and other types of assets
In addition, the estate trust can’t be created under conditions involving fraud, deceit, coercion, or threats of harm. That is, the estate creator must be voluntarily initiating the creation of the trust. This is important to note, as particularly large or valuable estates can sometimes be subject to estate fraud or criminally motivated actions.
Do I Need a Lawyer for Help With an Estate Trust?
Estate trusts can be very beneficial for the estate holder and the estate holder’s surviving spouse. However, one should consider carefully whether such an arrangement is right for them, since an estate trust can affect the property distributions of other beneficiaries. It is in your best interest to hire a qualified lawyer in your area if you need help creating an estate trust, or if you need to file a lawsuit over a trust dispute.
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Last Modified: 02-28-2014 01:05 PM PST
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