What Is A Trust In Virginia?

When it comes to estate planning, creating a trust can be a pivotal step toward securing your family’s future. At Commonwealth Life & Legacy Counsel in Central Virginia, we often address many questions and concerns from our clients about what trusts are and how they can be beneficial. 

Trusts often seem complex because they are intangible and abstract, but they can be extremely useful tools for accomplishing goals in a variety of situations, so it is worth a little extra effort to consider the advantages they can provide during and after your lifetime. This guide is designed to demystify trusts and explain their importance in ordinary language.

What Is a Trust?

A trust is a legal arrangement allowing a third party, or trustee, to manage assets on behalf of a beneficiary (or multiple beneficiaries). Trusts are versatile instruments used for various purposes, including asset protection, tax planning, and avoiding the lengthy and public probate process.

Different types of trusts are designed to serve different needs. Types include revocable trusts, which can be altered or terminated by the trustor during their lifetime, and irrevocable trusts, which, once established, cannot generally be changed. Revocable trusts are flexible while irrevocable trusts are strong and provide greater protection. 

A trust splits the aspects of property ownership among three people. The trustor creates the trust and contributes property into the trust to fund it. The trustee manages the property in the trust, and the beneficiary gains the use and benefits of the property as it is distributed to them by the trustee.

Benefits of Establishing a Trust in Virginia

Creating a trust offers numerous benefits, particularly regarding estate planning and asset management. Here’s how a trust might be advantageous:

• Avoiding Probate: One of the most significant benefits of a trust is that it can allow your estate to bypass the probate process, speeding up the distribution of assets to your beneficiaries and maintaining privacy.
• Tax Advantages: Certain types of trusts can minimize estate taxes, allowing you to leave more of your estate directly to your beneficiaries.
• Asset Protection: Irrevocable trusts can protect assets from losses due to lawsuits, future business debts, and other potential problems that may develop over time. 
• Eligibility for Government Benefits: Certain types of trusts are designed to hold assets so they do not disqualify older individuals or those with special needs from receiving benefits such as Medicaid long-term care assistance or SSI disability benefits. 
• Control Over Assets: Trusts allow you to control how your assets are distributed to the beneficiaries. For example, you might stipulate that the assets should only be disbursed for educational purposes or released when the beneficiary reaches a certain age.

Considerations When Setting Up a Trust in Virginia

Setting up a trust involves several important decisions and steps. You need to choose the type of trust designed to meet your specific needs. While most people use revocable trusts as a planning tool to avoid probate, you need an irrevocable trust to protect assets from creditors, reduce tax liability, or provide for a disabled family member. You might choose to create a testamentary trust to provide for a minor child in case of emergency. Your attorney can review the options and explain how they operate. 

It is crucial to choose a reliable and trustworthy trustee, as this person will be responsible for managing the trust according to your wishes. If you are establishing a revocable trust to avoid probate, you will probably serve as your own primary trustee, but you will need to designate a successor to take over if you become incapacitated or when you pass away. 

Trusts must comply with Virginia law and federal laws to be valid. It’s essential to work with a knowledgeable attorney to ensure that your trust is set up correctly and that you know how it must be administered to abide by all relevant laws and regulations.

Why Choose Commonwealth Life & Legacy Counsel?

The creation and management of a trust don’t have to be daunting. Our firm in Central Virginia is here to guide you through each step, ensuring that your estate planning meets your needs and those of your loved ones. We understand the intricacies of Virginia law and how to tailor estate planning tools to fit diverse family situations and objectives.

To explore how setting up a trust can benefit you and your family or to get answers to any other estate planning questions you might have, don’t hesitate to reach out. Call Commonwealth Life & Legacy Counsel in Central Virginia at (434) 589-2958 or in Powhatan at (804) 598-1348, or reach out online to set up a free consultation to discuss your estate planning needs. Let us help you secure your legacy and provide peace of mind for the future.