Can Someone Set Up Multiple Living Trusts?
In short yes, you can have multiple living trusts, but the question to ask is whether you need them. You will need to consider your intended beneficiaries, creditor/liability concerns, tax implications and overall planning goals. A living trust is an instrument that a grantor creates during his lifetime. He chooses the assets that will fund the trust, and names a trustee to manage the assets in the trust. He may include all types of terms that relate to the management of these assets and the trust itself. At the grantor’s death (or upon a predetermined distribution schedule) the assets are transferred to the named beneficiaries.
Why would someone need or want to create multiple living trusts?
Reason #1: Someone who owns several businesses and/or properties may utilize several trusts to help shield assets from creditors and/or lawsuits originating out of a business and/or property held in a separate trust. To prevent a creditor from going after the owner’s entire wealth, separate trusts can force the creditors to work within the confines of only the property owned by the trust that created the situation for the liability. This can also be done using one living trust and multiple irrevocable sub trusts. Each sub trust exists until such time that property is sold and then the sub trust can be terminated. The sole beneficiary of each sub trust is the primary revocable living trust.
Reason #2: Blended families may find that having multiple living trusts that work together offers more flexibility and protection. If you have children from various partners and/or you and your current spouse each have children from previous relationships, a combination of living trusts can help you distribute assets along familial lines.
Reason #3: If one of your intended beneficiaries has special needs, you may find that you need a separate special needs trust in addition to the living trust that handles all of your other distributions to other beneficiaries. The reason for this being that the beneficiary with special needs may lose certain government benefits with an outright inheritance. Special needs trusts are designed to allow someone to inherit while still maintaining the ability to receive those government benefits.
Reason #4:If you own guns, you may need to set up a separate gun trust in order to comply with Maryland gun laws.
Reason #5: Pet owners may also want to set up a separate pet trust to name caregivers, provide instructions for pet care and provide separate resources for that on-going financial support.
Reason #6: For those with philanthropic goals, charitable trusts may be used to benefit certain, qualifying charitable organizations while also providing tax breaks to your other beneficiaries.
Reason #7: If you own a home and would like for one beneficiary to live in the home for his or her lifetime and then have that home transfer to another beneficiary at that resident’s death, then you can create a personal residence trust. This allows that person to remain in the home without being named on the deed. This is popular for second marriages where a spouse wants to provide the home to the other spouse for his or her lifetime, but at death, have the property transfer to biological children.
As you can see, comprehensive estate planning may use a myriad of tools including multiple living trusts to ensure your ultimate goals are achieved. For more information on any of these types of trusts, contact the experienced estate planning attorneys at Stouffer Legal in the Greater Baltimore area. You can schedule an appointment by calling us at (443) 470-3599 or emailing us at office@stoufferlegal.com.
