For most people, one of the typical trusts will take care of their estate planning needs. But for special circumstances, there are special trusts. Here are a few you should know about:
Environmental remediation trust. This trust ensures that appropriate environmental remediation is being carried out. The primary purpose of an ERT must be to collect and disburse money for the environmental remediation of an existing waste site to resolve, mitigate or prevent liabilities imposed by federal, state or local environmental laws. Its contributors must be potentially liable or have a reasonable expectation of liability. An ERT’s goal is to clean up an existing waste site as opposed to generate profits. If an ERT becomes too heavily focused on profit-making, the IRS will cease to recognize it as a trust.
Pet trust. This trust specifies how your animal companions will be cared for financially if you become ill or disabled. You can detail how to handle routine and emergency veterinary care, grooming, feeding, boarding and end-of-life care according to your wishes. While pet trusts can remain in place for the pet’s life expectancy, some states limit them to 21 years. And a pet trust can cover almost any kind of animal, from cats, dogs and horses to lizards and hamsters.
Gun or firearms trust. This is a generic name for a revocable or irrevocable management trust that’s created to take title to firearms. Revocable trusts are more common because they can be amended during your lifetime.
Why do you need a trust for your guns? The transport and transfer of ownership of heavily regulated firearms can easily become a felony without you being aware that you broke the law. A gun trust allows for the orderly transfer of the weapon upon your death to a family member or heir. The transferee must go through background checks and identification processes before taking possession of the firearm. If multiple parties want access to the weapon, they must be co-trustees of the gun trust and go through the same background checks and identification processes.
If the collection has significant value and will be liquidated at your death, a gun trust can provide for the orderly disposition of firearms by the successor trustee. Proceeds from the sale of the firearms can be invested to provide an income stream to heirs or to charity.
Coogan trust. This trust is named for Jackie Coogan, one of the first child film stars, who discovered that his mother and stepfather had spent the entirety of his millions without his knowledge. It requires that 15% of every child actor’s earnings be shielded in a trust (Coogan account) that they’ll gain access to once they reach adulthood. The trust is monitored but not withdrawn by a legal guardian until the child reaches legal maturity. The trust effectively guarantees that child actors are shielded from total mismanagement of their earnings.
Whether one of these trusts or something more basic applies to you, we can help you pick the right tools to manage your estate.
Check out our previous post: Unintended Consequences of a Do-It-Yourself Estate Plan
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