Ohio residents who are creating an estate plan may want to consider the role that trusts might play. Trusts can be helpful in a variety of situations and at many different income levels. There are many different types of trusts as well. For example, there are revocable and irrevocable trusts. The former can be altered during a person's lifetime while the latter cannot. Both can help provide estate tax protection, but an irrevocable trust can also protect assets from creditors and lawsuits.
For a wealthy family, a credit shelter trust is another way to shield the estate from estate tax. However, they are less useful since married couples can now combine their estate tax exemptions. People at different income levels might want to set up a generation skipping trust. This can be a way of ensuring that assets go directly to grandchildren. For wealthy families, it can be another way to avoid estate tax.
Another option is a qualified personal residence trust. This is a way of removing the home from the value of the estate and keeping its value correlated to the time the deed transfers which results in lower taxes. It involves placing the home in a trust while keeping the right to live in it for a certain period of time.
Trusts also have many other different uses. They can be set up to link distributions to milestones. For example, beneficiaries might receive a distribution when they reach a certain age or educational level. They can also be used to help support a loved one with special needs without jeopardizing that person's access to state or federal funding. An attorney may be able to provide advice regarding trusts based on a client's particular circumstances as the estate plan is being constructed.