Understanding The Benefits Of A Simple Trust
Trusts are a great legal tool to aid in estate distribution and taking care of loved ones after you are gone. From an estate planning perspective, trusts are useful because they can protect certain assets, eliminate the need for probate and reduce (or at least simplify) tax obligations. For named beneficiaries, trusts typically provide a steady source of income over time.
At Herrenkohl Law Office, we offer simple trust preparation as part of our broader estate planning services. In addition to helping you establish the trust, we will also explain its benefits, obligations and tax ramifications under state and federal laws.
What Is A Simple Trust?
You as the grantor would transfer a certain amount of assets into the trust (referred to as the principal). The assets would earn income over time, which would then be distributed to the trust beneficiaries.
A simple trust is one in which all of the income earned is distributed to beneficiaries yearly. Depending on the terms of the trust, the beneficiaries would have no access to the principal until a certain period of time has passed.
The term “simple” in this case refers to the tax status of the trust, and is contrasted with a “complex” trust. Each year, beneficiaries must pay a tax on the income received from the trust.
The Trustee’s Very Limited Role
If you established a complex trust, your chosen trustee might need to make investment decisions and other important choices in the management of the assets. With a simple trust, the trustee’s only job is to ensure that the income and principal are distributed on the timeline established in the trust. This means much less work for the trustee and much more predictability for you as the grantor of the trust.
Contact Us To Learn More About Your Estate Planning Options
Herrenkohl Law Office is based in Barboursville (with a second office in Beckley) and serves clients throughout southern West Virginia. To arrange your initial consultation with an experienced estate planning lawyer, call us at 304-948-5703 or fill out our online contact form. We look forward to helping you meet your estate planning goals.