Trust Attorneys
A trust is a legal arrangement under which a trustee holds and manages property for beneficiaries according to written terms. Those terms identify who benefits, who manages the assets, and when distributions may be made. Trusts can address probate, incapacity, inheritance, Medicaid eligibility, taxes, and support for a beneficiary with a disability. Specialized trusts can also provide for pet care or the lawful ownership and transfer of firearms.
Milvidskiy Law Group P.C. drafts, funds, and administers trusts for individuals and families. We help determine whether a trust is appropriate and which type serves the client’s goals.
Key Takeaways:
- A trust separates legal ownership, held by the trustee, from beneficial ownership, held by the beneficiaries. That split is what lets a trust avoid probate, manage incapacity, and control distributions.
- Revocable trusts keep you in control but offer no creditor protection; irrevocable trusts give up control in exchange for asset protection, Medicaid, or tax benefits. Choosing between them is the central decision.
- A trust only works for assets that are actually titled to it or that name it as beneficiary. Funding and ongoing maintenance matter as much as the document itself.
How a Trust Works
Every trust has three roles and one subject. The grantor (also called the settlor or trustor) creates the trust and transfers property into it. The trustee holds legal title to that property and manages it under the terms of the trust document. The beneficiaries hold the beneficial interest: the right to receive income or principal as the document directs. The trust property, sometimes called the corpus or principal, is whatever the trust owns.
The defining feature of a trust is the split between legal and beneficial ownership. The trustee owns the property in name and has the power to manage it, but owes fiduciary duties of loyalty, prudence, and impartiality to the beneficiaries. Because the trustee, not the deceased individual, holds title, trust assets generally pass under the trust document rather than through a court-supervised estate.
How Trusts Are Classified
Revocable vs. Irrevocable
A revocable trust can be amended or revoked by the grantor at any time while the grantor has capacity. You keep full control of the assets, and for income tax purposes nothing changes. The trade-off is that assets you control remain reachable by your creditors and count as yours for Medicaid and estate tax purposes. In a typical revocable living trust you are grantor, initial trustee, and lifetime beneficiary all at once.
An irrevocable trust generally cannot be changed by the grantor alone once it is signed. In exchange for giving up control, the grantor can remove assets from his or her taxable estate, shelter them from future creditors, or position them for Medicaid eligibility after any applicable look-back period. Someone other than the grantor usually serves as trustee.
Living vs. Testamentary
A living trust (inter vivos trust) is created and takes effect during your lifetime and can be revocable or irrevocable. A testamentary trust is written into your will and comes into existence only after your death, once the will is admitted to probate. Testamentary trusts do not avoid probate, but they are a common way to hold an inheritance for minor children or a surviving spouse. A will-based plan also does nothing for incapacity; that gap is usually filled with a living trust or a power of attorney.
What Trusts Are Used For
- Probate avoidance. Assets titled to a trust pass under its terms without a court proceeding, saving time, cost, and public disclosure.
- Incapacity management. A successor trustee can step in and manage trust assets if you cannot, often without a guardianship or conservatorship proceeding.
- Control over timing and conditions. You can stagger distributions by age or milestone, or leave them to a trustee’s discretion, instead of handing an heir a lump sum.
- Creditor and divorce protection for beneficiaries. Spendthrift and discretionary provisions can help keep an inheritance separate from a beneficiary’s creditors, lawsuits, and divorcing spouse.
- Tax planning. Irrevocable trusts can remove assets and their future growth from your taxable estate and can be paired with generation-skipping planning for larger estates.
- Medicaid eligibility. An irrevocable trust can hold a home and savings so they are not counted for long-term care Medicaid after the look-back period.
- Care for a person with special needs. A supplemental needs trust can provide for a loved one with a disability without disqualifying him or her from means-tested benefits.
- Pets and firearms. Purpose-built trusts can fund an animal’s lifetime care or hold firearms so they are managed and transferred lawfully.
Types of Trusts We Draft
Revocable Living Trust
The foundation of many estate plans. A revocable living trust holds your assets during life, provides for a successor trustee if you become incapacitated, and distributes or continues to hold assets for your family after death. It offers privacy and probate avoidance but no creditor protection during your lifetime.
Medicaid Asset Protection Trust
A Medicaid Asset Protection Trust is an irrevocable trust designed to hold a home and other assets so they are not counted when applying for long-term care Medicaid, once the applicable look-back period has run. Grantors often keep the right to live in the home and to receive trust income.
Special Needs Trust
Also called a supplemental needs trust, this trust pays for needs that public benefits do not cover while keeping a beneficiary with a disability eligible for those benefits. It is one component of special needs planning.
Dynasty Trust
A dynasty trust is a long-term irrevocable trust designed to hold and grow wealth for children, grandchildren, and later generations while shielding each generation’s share from creditors, divorce, and repeated transfer taxes. How long such a trust may last varies by state.
Asset Protection Trusts
Asset protection trusts are designed to place assets beyond the reach of future creditors. Timing is critical: transfers made after a claim arises can be unwound.
Tax Planning Trusts
Tax planning with irrevocable trusts, such as life insurance trusts, qualified personal residence trusts, and charitable trusts, can reduce estate and gift tax exposure or shift appreciation out of your estate.
Pet Trust
A pet trust names a caregiver, funds your animal’s care, and appoints a trustee to see that the money is spent as you intend.
Gun Trust
A gun trust holds firearms, including items regulated under federal law, so they can be possessed by authorized trustees and transferred at death in compliance with federal and state rules.
Testamentary Trusts
Testamentary trusts are created inside your will for a spouse, minor children, or a beneficiary who should not receive assets outright. They are simple to set up but require probate to take effect.
Trustee, Funding, and Administration
Choosing a Trustee
The trustee makes the trust work, so the choice deserves care. A family member knows your values and usually serves without a fee, but may lack the time, financial background, or neutrality the job requires. A professional trustee brings experience with investments, accounting, and beneficiary needs and disputes, at a cost. Milvidskiy Law Group P.C. offers professional trustee services and can also serve as an independent trust protector with power to replace trustees or adapt the trust to changes in law.
Funding the Trust
A trust controls only what it owns. Funding means retitling real estate, accounts, and business interests to the trustee, or naming the trust as beneficiary of life insurance and, where appropriate, retirement accounts. Assets left in your individual name still pass through probate. Our trust funding and maintenance service handles the initial transfers and keeps the plan current through our Client Care Program.
Trust Administration After Death
When the grantor dies, the successor trustee gathers and values assets, notifies beneficiaries, pays debts and expenses, files any required tax returns, and distributes or continues to hold assets under the trust’s terms. Trustees owe a duty to account and can be personally liable for mistakes. Our trust administration attorneys guide trustees through each step and represent beneficiaries with questions about how a trust is being run.
Common Misconceptions About Trusts
“Trusts are only for the wealthy.” Many of the trusts we draft are for families whose main asset is a home. Probate avoidance and incapacity planning matter regardless of net worth.
“A trust avoids all taxes.” A revocable trust has no tax effect; you are taxed exactly as before. Certain irrevocable trusts can reduce estate or gift tax, but income earned by trust assets is still taxed to someone, and inheritance tax rules vary by state.
“A revocable trust protects my assets from creditors.” It does not. Because you can take the assets back, the law treats them as yours. Creditor protection requires an irrevocable trust, and even then, transfers made to defeat an existing creditor can be set aside.
When a Trust May Not Be the Right Tool
Not everyone needs a trust. If your assets are modest, already pass by beneficiary designation or joint ownership, and you have no concerns about incapacity, minor children, or a vulnerable heir, a will and a durable power of attorney may be enough. A trust also adds upkeep, and irrevocable trusts may require separate tax returns. A simpler plan is sometimes the better fit, and that option stays open throughout the planning process.
What Our Trust Service Includes
- An initial meeting to review your family, assets, goals, and any health or long-term care concerns.
- A recommendation on whether a trust is appropriate and, if so, which type or combination fits your goals.
- Drafting the trust and the documents that work with it, including a pour-over will, powers of attorney, and health care directives.
- Funding assistance: deeds, account retitling, and beneficiary designation changes.
- Ongoing maintenance through our Client Care Program, and trust administration support for your trustee when the time comes.
Schedule a Trust Consultation
If you are weighing whether a trust belongs in your plan, or which one, our attorneys can walk you through the options. We meet with clients in New York, New Jersey, and Connecticut in person and by video conference. Contact Milvidskiy Law Group P.C. to schedule a consultation with a trust attorney.
This page is provided for general informational purposes only and does not constitute legal advice. Laws differ by state and change over time. For advice about your situation, consult a qualified attorney.
Frequently Asked Questions
What is the difference between a trust and a will?
A will takes effect only at death and generally must be admitted to probate before anyone can act on it. A trust can hold and manage assets during your lifetime, including during incapacity, and assets titled to it pass under its terms without a court proceeding. Most trust-based plans still include a pour-over will to catch anything left outside the trust.
What is the difference between a revocable and an irrevocable trust?
A revocable trust can be changed or cancelled by the grantor at any time, so you keep full control, but the assets remain yours for creditor, Medicaid, and estate tax purposes. An irrevocable trust generally cannot be changed by the grantor alone. Giving up that control is what allows the trust to remove assets from your taxable estate, shelter them from future creditors, or support Medicaid eligibility.
Do I need a trust if I already have a will?
Not always. If your estate is modest, your assets pass by beneficiary designation or joint ownership, and you have no concerns about incapacity or vulnerable heirs, a will and a power of attorney may be enough. A trust becomes more valuable if you own real estate, want to avoid probate, need incapacity planning, or want to control how and when heirs receive their inheritance.
Who should I name as trustee?
Choose someone organized, financially responsible, and able to stay neutral among beneficiaries. Family members are the most common choice and usually serve without a fee, but they may lack time or financial background. A professional trustee, or a professional serving alongside a family member, can be a better fit for larger trusts, long-term trusts, or families with tension. Milvidskiy Law Group P.C. offers professional trustee and trust protector services.
What does it mean to fund a trust?
Funding means transferring ownership of your assets to the trustee, or naming the trust as beneficiary of accounts that pass by designation. Real estate is transferred by deed, accounts are retitled, and life insurance or retirement accounts may name the trust as beneficiary where appropriate. Assets you never transfer stay in your individual name and may still go through probate.
Does a revocable trust protect my assets from creditors or nursing home costs?
No. Because you can revoke the trust and take the assets back, the law treats them as yours for creditor and Medicaid purposes. Creditor protection and Medicaid planning require an irrevocable trust, and the transfer generally must be made well before any claim arises or before the Medicaid look-back period begins to run.
Does a trust avoid estate or income taxes?
A revocable trust has no tax effect at all; you are taxed exactly as you were before. Certain irrevocable trusts can reduce federal or state estate tax by removing assets and their growth from your taxable estate, but income earned by trust assets is still taxed to the grantor, the trust, or the beneficiaries. State estate and inheritance tax rules vary and change over time.
What happens to a trust when the grantor dies?
The successor trustee named in the document takes over without a court appointment. The trustee collects and values the assets, notifies beneficiaries, pays debts, expenses, and any taxes, and then distributes or continues to hold the assets as the trust directs. Trustees owe fiduciary duties to the beneficiaries and can be held personally liable for mistakes, which is why many work with a trust administration attorney.
Can a trust be changed after it is signed?
A revocable trust can be amended or revoked by the grantor while he or she has capacity. An irrevocable trust generally cannot be changed by the grantor alone, but many modern irrevocable trusts give a trust protector limited power to adapt the trust to changes in law or family circumstances. Court modification or beneficiary consent may also be available depending on state law.
How do I get started with a trust?
Begin with a consultation. Our attorneys review your family, assets, and goals, explain whether a trust makes sense and which type fits, and then draft the trust and supporting documents. After signing, we help fund the trust and keep it current through our Client Care Program.
