Comparing a Discretionary Trust to an Income for Life Trust
This edition of the Koldin Law Center E-Newsletter is part of a series about frequently asked questions comparing legal documents, legal roles, and government benefits.
All prior newsletters are saved on our website. You can read them by clicking here.
We receive many questions from clients and readers of our newsletter asking about the differences between various legal documents, legal roles, and government benefits. In this newsletter we compare a Discretionary Trust to an Income for Life Trust.
Discretionary Trust
In the previous newsletter we reviewed how a “Discretionary Trust” is sometimes referred to as a “Support Trust.” The Trust can provide support and pay expenses of a family member such as an adult child. This is often used when a child does not handle funds well and would squander his/her inheritance. Such a trust would have the Trustee be the caretaker of the funds and use discretion as to when and how the funds should be spent.
Income for Life with Discretionary Principal Trust
As part of the Discretionary Trust, there could also be mandatory distributions as well as discretionary distributions. For example, the Trustee might be required to distribute all Trust Income to the beneficiary and then have discretion to use Trust Principal to provide additional support to the beneficiary.
Income for Life Trust
You can leave assets in a Trust where the beneficiary would receive all of the income earned on Trust assets, but the principal would remain in the Trust.
The Trustee would not have any discretion to distribute principal to or for the beneficiary. Upon the death of the beneficiary, the balance would then go to whomever you have designated.
This type of trust is often used in a second marriage situation where you want to provide for your spouse for life, but on his/her death, the balance would then go back to your children.
A “Discretionary Trust” or “Income for Life Trust” can be created as a stand alone Living Trust, as part of your Will, or as part of the beneficiary provisions of your Irrevocable Trust or Revocable Trust.
For more information about Beneficiary Trusts, please see our website by clicking here.
At the Koldin Law Center, P.C., located in East Syracuse, New York, we have over 50 years of experience helping individuals plan for immediate crisis and long term care.
The Koldin Law Center, P.C. limits its practice to the specific field of Elder Law which includes estate planning and Medicaid law.
Our attorneys are available to discuss your estate planning options, including the advantages and disadvantages of Revocable Trusts and Irrevocable Trusts, along with other estate planning considerations including a Will, Power of Attorney, and Health Care Proxy.
When the Koldin Law Center, P.C. handles a Medicaid case, we not only handle the entire application process, but we also review asset protection options with our clients. We review with our clients who are already in a Nursing Home options to protect some or all of their assets beyond merely establishing Medicaid eligibility.
We do not charge a fee for the initial consultation. We welcome your children, family attorney, accountant, and/or financial planner to be present at the initial consultation.
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We have been told by many clients who are in a crisis that they wish they had known about our firm much sooner. We are proud of the many families we have helped in times of crisis.
We are also proud of the many families we helped avoid financial crisis by doing estate planning in advance.
We all share the responsibility for making our family and friends aware of the planning options available to them.
Your referral to the Koldin Law Center could make a major difference in the lives of your family and friends if they are someday faced with a long term illness.
Remember that the Koldin Law Center offers many services for clients of all ages. Our services range from basic estate planning such as a simple will to complex estate planning including asset preservation planning.
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