When setting up an estate plan, many people choose to build a trust to transfer their assets to beneficiaries. There are several benefits to having a trust over a will, including avoiding probate court and fewer taxes. Having your assets in a trust means you may access them while you are still living, and you can allow your beneficiaries access to the trust now or wait until after you pass. There are several types of trusts, including a non grantor trust.
If you are looking to establish a multigenerational estate plan, a trust may be your best option. Choosing a trust over a will is your first step. Now you need to determine what type is best for you.
We will look at 2 types here: Grantor Trust and Nongrantor Trust.
Grantor Trust: The person making the trust (trustmaker) retains certain powers. Some of these are: The power to revoke the trust at any time. The power to add trust beneficiaries at any time. The power to borrow money from the trust. Since the trustmaker is in charge, the IRS will tax all income earned from the trust to the trustmaker.
Nongrantor Trust: Here, the trustmaker gives up all power over the trust and has no rights to any of the trust accounts or property. The named beneficiary is considered the owner and will file all income earned as their income. This means the trustmaker is not viewed as the owner and does not have to pay income taxes.
There are certain benefits to choosing a non grantor trust. Some are:
But remember the disadvantage of a non grantor trust: the trustmaker gives up all powers associated with the trust.
Since there are many types of trusts, it is best to talk with an experienced trust attorney. We will help you decide the best type of trust for your plans now and in the future.
Do you need to establish a non grantor trust – or any trust? Call us to schedule a consultation with the experienced trust attorney at Estate and Probate Legal Group. Contact our office or call us at 630-864-5835.
AREAS WE SERVE: Cook, DuPage, Kane, Lake and Will counties.
