When you set up a trust fund, it isn’t really meant to last forever. There are some rules about how long a fund should be maintained and what should happen to the assets inside, but there are also certain types of trusts with their own rules and exceptions. It’s a good idea to talk to a Des Moines trust lawyer about all of your options.
Get Help TodayWhen you set up a trust fund, it’s supposed to last until its purpose is served. If it lasts for 21 years or longer, this can complicate matters. There could be a big tax bill and some paperwork to take care of because these funds are not meant to be maintained forever. If there was no limit, such trusts could be used to bypass capital gains taxes for generations.
If you have a trust fund coming up on the 21-year mark, you should talk to a lawyer or financial advisor about how to handle it. There may be ways to distribute the assets and save yourself from a massive tax liability.
There are trust funds that are supposed to last a long time though. One good example of this is a special needs trust. When properly set up, this kind of trust fund can provide money for a loved one with special needs without disqualifying them from seeking useful government benefits, like SSI and Medicaid. Its purpose is to provide for your loved one, so it can keep doing that for as long as that relative lives or funds remain in the trust.
You can also establish a spendthrift trust for a loved one who is not great at managing their own money. Funds would be dispersed at the behest of a trustee instead of the beneficiary. Depending on the age of the beneficiary and the value of the trust, this fund could last for a while.
Then there are trusts that shouldn’t bump up against the 21-year rule because they are meant to quickly disperse assets and dissolve. A testamentary trust set up to distribute assets to beneficiaries after you pass away is a good example of this. The trustee should have all of your assets handed out to the right heirs within a year or two, and then the trust fund can be dissolved.
Setting up a trust fund can be tricky and you want to make sure that you are using the right kind of trust for your intended purposes. Our lawyers can help you sort through all of your options and ensure that everything is done by the book.
If you’re ready to learn more about trusts and how exactly they work, you should talk to an experienced estate planning lawyer. Contact Herting Law, PLLC and ask to schedule an appointment with our team today.
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