Do You Need a Trust in Virginia?

When it comes to financial security, there's a lot to be concerned about these days. Whether it's rising inflation, stock market fluctuation, unexpected job loss, or increased living expenses, not having enough money to cover your basic needs and provide for your loved ones when you're gone can be a significant concern. One way to protect yourself and your family from financial insecurity is to create a trust. Creating a trust is a complex process, so working with an experienced legal team of trust attorneys is essential. At PJI Law, PLC, we understand the peace of mind that comes from knowing you and your loved ones are protected from financial hardship. In this article, we share trust basics and why trusts are an essential part and cornerstone of estate planning. If you have specific questions about your situation, please do not hesitate to contact us at (703) 865-6100.

What Is a Trust?

A trust is a legal entity that can hold and manage your assets. It can be used to provide for your family in the event of your death or disability, or to help you manage your finances if you become unable to do so yourself. Trusts can also be used to minimize taxes, avoid probate, and protect your assets from creditors. Trusts set the terms for the trustee’s management of the assets for distribution to one or more designated beneficiaries. The trustee is a fiduciary obligated to handle the trust assets according to the terms of the trust document and solely in the best interests of the beneficiaries. You can read more about a fiduciary’s duties here. Unlike wills which take effect upon death, trusts become effective upon the transfer of assets to them.

Types of Trusts in Virginia

Some of the common types of trusts we help clients create are:

• Revocable Living Trust. A revocable living trust is a powerful estate planning tool that allows you to remain in control of your assets during your lifetime, have them managed during incapacity (which can avoid guardianship or conservatorship proceedings), and transfer them to your loved ones at death according to your wishes. As the creator of the trust (settlor), you can choose to serve as the trustee and beneficiary of your trust during your lifetime. The terms of the trust can be revised or revoked at any time as long as you are alive and of sound mind. Upon your death, your designated successor trustee will distribute the assets of the trust according to your instructions. While you have more freedom with a revocable trust, it does not shield your assets from taxes or creditors.
• Irrevocable Trust. On the other hand, an irrevocable trust cannot be changed once established. Once you put assets in the trust and name a beneficiary, it’s permanent. However, an irrevocable trust has a significant advantage in shielding beneficiaries from probate and estate taxes. Another benefit is becoming Medicaid eligible. If you establish an irrevocable trust, you must also consider how it will be managed.
• Charitable Trust. A charitable trust can be a great way to support your favorite causes and leave a lasting legacy. In Virginia, these trusts are often used to manage assets that are intended for charitable purposes. For example, a donor might set up a trust to provide financial support for a local food bank. The terms of the trust can be very specific, dictating how and when the assets will be used. Charitable trusts can be a powerful tool for those who want to make a difference in their community.
• A special needs trust can be created to provide for a loved one with special needs without jeopardizing their government benefits. The trust can be used to pay medical and dental expenses, housing, education, and other essential needs.

Benefits of Creating a Trust in Virginia

Several benefits come with creating a trust. These benefits include:

• Avoiding Probate: If you die without a will or trust, your assets will have to go through probate—a legal process that can be time-consuming and expensive. By creating a trust, you can ensure that your assets will be distributed according to your wishes without going through probate.
• Minimizing Taxes: Trusts can also minimize taxes on your estate. For example, if you create an irrevocable trust and deed your home into the trust, you may be able to avoid paying capital gains tax on the sale of your home when you die.
• Protecting Assets: If you're concerned about creditors taking your assets, creating a trust can help protect your assets from creditors.
• Managing Assets for Beneficiaries: If you have minor children or disabled adults in your life, creating a trust can ensure they will be taken care of financially if something happens to you.

PJI Law, PLC: Your Estate Planning Attorneys for All Your Trust Needs

At PJI Law, PLC, each client receives our complete dedication, personal attention, and courteous, white-glove service. To provide the best experience possible, our skilled team responds quickly to each client and employs cutting-edge technology. If you'd like to learn more about establishing a trust, the legal team at PJI Law is here to answer any questions you may have. Our Fairfax, Virginia, estate planning lawyers have helped clients create trusts and wills, advance medical directives, powers of attorney, and much more. Call us at (703) 865-6100 or complete our online form to schedule your consultation. Copyright © 2022. PJI Law, PLC. All rights reserved.