When is a specialized trust necessary? What happens to your assets after your death? It depends on what, if any, legal documents you have in place to direct the distribution of those assets. Generally speaking, assets can pass to beneficiaries through a few methods including intestate succession, beneficiary designations, a will, and/or a trust. Each method has its own benefits, costs, and quirks to consider when creating your estate plan. Some situations may require a specialized form of trust for assets to pass gracefully.
Certain unique assets are subject to regulations that may impact personal privacy if held in a trust. For example, a trust holding an airplane may be subject to review by the Federal Aviation Administration. A trust holding a National Forest Recreation Residence must be submitted to the United States Forest Service. For most people, submitting the details of their primary revocable living trust to these agencies, and having that trust become part of the public record, is undesirable. It may make sense or be necessary to establish an additional trust that is specific to the requirements of the appropriate agency, to hold the unique asset alone. However, this must be carefully coordinated with other revocable living trusts and your overall estate plan.
Another common, but specialized, concern comes up when a beneficiary has special needs. In order to preserve government benefits that such a beneficiary may receive, it may be necessary to structure a trust with the beneficiary’s special needs in mind. A Third-Party Special Needs Trust places restrictions on asset distribution designed to ensure the beneficiary is not disqualified from government benefits to which they are entitled. To be effective, such a trust must be carefully crafted and established in advance of your passing as a part of a coordinated estate plan.
We’ve been reviewing various methods of passing assets in past news posts, and the Oregon State Bar provides additional resources on estate planning. But if you’re wondering how all of this affects your personal situation and would like custom-tailored professional advice, please contact us now to begin exploring your estate planning options.