Support Trusts

A Support Trust is a type of irrevocable trust designed to provide financial support for one or more beneficiaries based on their needs. The trust document specifies that the trustee must distribute income and/or principal from the trust to support the beneficiary's health, education, maintenance, or general welfare.

Key Features of Support Trusts:

1. Defined Beneficiary Support: The trust document outlines specific purposes for which distributions can be made, such as education expenses, medical care, housing, and other essential needs of the beneficiary.
2. Trustee Discretion: While the trustee must use trust assets to support the beneficiary, the trustee has discretion over the timing and amount of distributions. This allows the trustee to respond flexibly to changing circumstances or unexpected needs.
3. Asset Protection: Assets held in a Support Trust are generally protected from creditors of the beneficiaries, providing a level of asset protection.

Advantages of Support Trusts:

1. Protection of Beneficiary's Interests: Support Trusts ensure that trust assets are used to support the beneficiary's needs rather than being spent unwisely or subject to external pressures.
2. Asset Management: A professional trustee can manage trust assets prudently and ensure they are used effectively to meet the beneficiary's ongoing needs over time.
3. Tax Planning: Support Trusts can be structured to maximize tax advantages, such as minimizing estate taxes, income taxes on trust income, and potentially qualifying for certain tax deductions related to support expenses.
4. Control Over Distribution: The grantor can specify clear guidelines for how and when distributions should be made, ensuring the beneficiary's needs are met without the risk of funds being depleted too quickly.

Disadvantages of Support Trusts:

1. Limited Beneficiary Control: Beneficiaries typically have limited control over trust assets and distributions, as the trustee holds discretion in managing and distributing funds based on the trust terms.
2. Administrative Costs: Establishing and maintaining a Support Trust may involve costs such as trustee fees, legal fees for drafting and administering the trust, and other administrative expenses.
3. Complexity: The complexity of managing a Support Trust, including compliance with legal and tax requirements, can require ongoing oversight and professional guidance from trustees and advisors.

Creating a Support Trust:

Establishing a Support Trust involves working with an experienced estate planning attorney to draft a trust document that reflects the grantor's wishes and meets legal requirements. The attorney can also guide you in structuring the trust to maximize benefits while minimizing potential drawbacks.

Contact Will and Trust Planning Today

For personalized advice on estate planning, including strategies to minimize or avoid probate, contact Will and Trust Planning today. Our experienced estate planning attorneys can help you understand your options, draft essential documents, and create a plan that protects your assets and achieves your goals.