Trusts are legally complex asset management structures you can establish to protect assets from probate to leave to your beneficiaries after you pass away. Many kinds of trusts are available, but to manage inheritance trust assets, many choose a revocable living trust or true asset protection irrevocable trust.
Rely on the experienced trust administration attorneys at Commonwealth Life & Legacy Counsel to guide you through creating, funding, and administering a trust.
Types of Trusts in Virginia
The Commonwealth of Virginia recognizes many types of trusts, including:
- Irrevocable trusts
- Revocable living trusts
- Charitable trusts
- Special needs trusts
- Trusts for minors
- Medicaid trusts
- Testamentary trusts
While not comprehensive, this list can help you understand that if you’re trying to decide what kind of trust to use, you should consult an experienced trust attorney at Commonwealth Life & Legacy Counsel.
The first step is to draft the trust document to create the trust and name the grantor (yourself), a trustee and successor trustee (who will administer the trust after your passing), and your beneficiaries (inheritors). You must then fund the trust with trust assets and pay the necessary fees to submit the appropriate documents.
A trust agreement allows you to transfer your trust assets to the trustee to hold on behalf of your beneficiaries.
Revocable Living Trusts vs. Irrevocable Trusts
The most common trusts people use to avoid probate are living trusts, which you can change throughout your lifetime, or irrevocable trusts, which you can’t easily dissolve or change after creating.
Irrevocable trusts constitute a true form of asset protection, as the trust gets its own EIN when you create it. Your creditors can’t pursue assets in an irrevocable trust because they don’t technically belong to you.
A living trust does not offer asset protection during your lifetime and qualifies as taxable assets and income for income and estate taxes. A revocable trust will become irrevocable upon your death, protecting those trust assets from the creditors of your beneficiaries, and also avoids probate.
Trust Administration and Your Trustee
When administering your trust to your beneficiaries, your trustee will have many tasks to complete. Your trustee will need to:
- Get copies of the death certificate to submit to financial institutions
- Notify the appropriate government departments of your passing
- Notify trust beneficiaries
- Create an inventory of trust assets
- Protect physical trust assets, such as maintaining a home until the beneficiary receives it
- Get the trust EIN and pay any necessary taxes with IRS Form 1041
Depending on the size of your estate and the assets within the trust, your trustee may need to complete additional steps to administer your trust.
Contact Commonwealth Life & Legacy Counsel to Help With Your Trust
Commonwealth Life & Legacy Counsel proudly helps clients protect their legacies with trust creation and administration services. If you’re a trustee who needs help with trust administration, they can help you plan how to distribute trust assets to beneficiaries. Call the Commonwealth Life & Legacy Counsel law firm from anywhere in Central Virginia at 434-589-2958 and from Powhatan at 804-598-1304 to schedule a free consultation.