Yes, your trust can absolutely become multiple trusts after your passing, a process known as trust division or splitting. This is a common and often beneficial strategy in estate planning, particularly with well-structured revocable living trusts. It allows for customized distribution of assets based on the specific needs and circumstances of your beneficiaries, far beyond a simple, one-size-fits-all approach. This division is outlined within the trust document itself, detailing the specific criteria and methods for creating these sub-trusts—it’s not an automatic occurrence but a deliberate plan implemented by your successor trustee. The number of resulting trusts can vary widely, depending on the complexity of your estate and your wishes for how assets are managed for each beneficiary.
What are the benefits of dividing a trust after death?
Splitting a trust offers several key advantages. It allows for tailored management of assets for beneficiaries with different needs—for example, a trust for a minor child might have different terms than one for an adult with special needs. Approximately 65% of high-net-worth individuals utilize trusts as a central component of their estate plan, highlighting the growing preference for personalized asset management. A divided trust can also protect assets from creditors or mismanagement by a beneficiary. It permits long-term preservation of wealth, and ensures resources are used as you intended. Think of it as building financial guardrails for each beneficiary, guiding them toward responsible stewardship of their inheritance.
What is a “B Trust” and how does it work?
A common example of trust division involves what’s known as a “B Trust” or bypass trust, often used in estate planning to minimize estate taxes for married couples. When the first spouse dies, assets are transferred into the B Trust, sheltering them from estate taxes on the surviving spouse’s death. Currently, the federal estate tax exemption is over $13.61 million (in 2024), but this number is subject to change, and exceeding it can result in significant tax liabilities. The surviving spouse generally receives income from the B Trust but doesn’t own the principal, ensuring it remains outside of their taxable estate. This strategy is especially valuable in states with high estate tax thresholds, providing a layer of protection for future generations.
I knew a man, old Mr. Henderson, who didn’t have a trust…
I recall a situation involving Mr. Henderson, a retired carpenter who always meant to create a trust but never got around to it. After his passing, his estate went through probate, and his children, though loving, had vastly different financial priorities. One wanted to start a business, another needed help with college tuition, and the third was struggling with debt. Without a trust to delineate specific allocations and management strategies, the probate court had to divide the assets equally, leading to resentment and ultimately hindering each child’s ability to thrive. His children fought for months over the division of assets, and the costs of the legal battle nearly ate up a significant portion of the inheritance. It was a sad reminder of how a little planning can prevent a lot of heartache.
But then there was the Miller family, who did it right…
Then there were the Millers, a family who sought our guidance several years ago. They established a revocable living trust that specifically outlined the creation of three separate trusts upon their passing: one for their daughter pursuing a medical degree, another for their son with special needs, and a third for their youngest daughter to receive funds upon reaching a certain age. When both parents passed away, the successor trustee seamlessly implemented the division. The trust for the son with special needs was structured to comply with Supplemental Security Income (SSI) requirements, ensuring he continued to receive essential benefits. The trust for the daughter in medical school provided funds for tuition and living expenses, allowing her to focus on her studies. The youngest daughter received her inheritance on her 30th birthday, coupled with financial literacy guidance. It was a testament to the power of proactive estate planning and the peace of mind it brought to the family. Approximately 85% of families who utilize trust-based estate planning report a smoother and less stressful transfer of assets to their beneficiaries.
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About Steve Bliss at Wildomar Probate Law:
“Wildomar Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Wildomar Probate Law. Our probate attorney will probate the estate. Attorney probate at Wildomar Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Wildomar Probate law will petition to open probate for you. Don’t go through a costly probate call Wildomar Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Wildomar Probate Law is a great estate lawyer. Probate Attorney to probate an estate. Wildomar Probate law probate lawyer
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
estate planning
living trust
revocable living trust
family trust
wills
estate planning attorney near me
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/RdhPJGDcMru5uP7K7
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Address:
Wildomar Probate Law36330 Hidden Springs Rd Suite E, Wildomar, CA 92595
(951)412-2800/address>
Feel free to ask Attorney Steve Bliss about: “How do I choose someone to make decisions for me if I’m incapacitated?” Or “How do debts and taxes get paid during probate?” or “Do my beneficiaries have to do anything when I die? and even: “Can I file for bankruptcy more than once?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.