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What should you know about trusts in Kentucky?

On Behalf of | Feb 21, 2024 | Wills & Trusts |

Trusts are tools for managing and safeguarding assets. They offer a combination of privacy, control and flexibility, which make them indispensable for individuals looking to navigate the complexities of asset distribution, tax planning and legacy preservation both efficiently and effectively.

The strategic use of trusts better ensures that a grantor’s wishes are honored during their lifetime and after their passing.

Revocable vs. irrevocable trusts

The diversity of trusts allows for tailored estate planning solutions that reflect each individual’s unique circumstances and goals. Revocable trusts offer the flexibility to adjust plans as life changes, while irrevocable trusts provide a fixed structure for asset protection and potential tax benefits.

Because the grantor maintains control of assets in a revocable trust, the contents of the trusts aren’t protected from creditors. The grantor relinquishes control when they create and fund an irrevocable trust, which paves the way for protection from creditors.

Benefits of all trusts

All trusts provide privacy for the beneficiaries. Trusts don’t have to go through the probate process, so they provide more privacy than passing down assets using a will. Avoiding the probate process can also get beneficiaries the assets they’re due much faster. This can also help to control the costs of the estate, which means more can be passed along to the beneficiaries.

If the grantor becomes incapacitated, trustees can manage assets for the beneficiaries. This ensures that financial decisions align with their wishes without requiring court intervention.

Charitable giving benefits

Trusts also provide a structured way to support charitable giving, enabling grantors to leave a lasting legacy while potentially receiving income during their lifetime. There are two basic types of charitable giving possible. One of these is that the charity gets what they’re due first and anything remaining is passed to beneficiaries. The other option passes specific assets to the heirs then the charity receives what’s left.

For a host of reasons, while not every individual is in a strong position to benefit from the creation of a trust, most adults – of all economic backgrounds – can benefit from exploring trusts as a consequential addition to their broader estate planning resources.