I want to establish separate trusts with each of my sons in addition to my own person trust.
Do I create three distinct trusts? Or is it necessary to have my personal trust which is funded with my personal assets, as well as my business corporation, as the parent trust and the two separate trusts with my adult children extending from my living trust?
It depends on when you want the trusts to be funded.
You can have one "living trust" which holds your property (of which you are the trustee) during your lifetime which becomes irrevocable upon your death and has several other trusts to be funded upon your death - all in one trust instrument. The advantage is that this type of trust can serve as a substitute to costly and time consuming probate when you pass away or if you became incapacitated since the successor trustee you designate in the instrument simply takes over for you without the necessity of court proceedings.
On the other hand, if you want to irrevocably give these assets to a trustee for beneficiaries other than yourself during your lifetime (ie, a gift you cannot take back), you should have a separate trust instrument for each trust you set up. You may or may not be able to serve as trustee of such a trust, depending on your various objectives.
Of course, there are unique income tax and estate/gift/GST tax consequences to either alternative that require a thorough assessment of the facts and circumstances. I recommend that you consult an experienced estate planning attorney in the state where you reside.
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There are too many factors and contingencies to provide a solid answer to your question without knowing additional facts. You should consult with an experienced estate planning attorney and provide him/her with all of your facts and specifically information regarding your business corporation (who owns it, who manages it, who benefits from it most. who are the critical employees who need to stay around for it to be successful after your death, etc.) and let that attorney provide you with options. As noted, there are different considerations and different tax consequences or limitations depending upon how or with what you fund trusts and one trust set up for the benefit of one son cannot be used to benefit another son if an extraordinary situation should arise. Expect this conversation to be long because, just typing this response, I can think of a half-dozen scenarios that would be addressed with different planning alternatives and unless I know what is most important or most concerning to you, I would not be able to provide you with appropriate guidance. Best wishes to you.
This response contemplates only the laws of Ohio and is not intended to apply to other jurisdictions. None of the information in this response should be used or relied upon as legal advice or legal opinion about specific matters, facts, situations or issues. Viewing it does not establish an attorney-client relationship between you and Sherrille D. Akin, the law firm of Isaac, Brant, Ledman & Teetor LLP, or any of its individual attorneys
As Mr. Baker and Ms. Akin explained, there are many factors that can affect how you set up your estate plan. I recommend that you first think about what your specific goals and concerns are before you start talking about trusts. If you are trying to plan for the succession of a family business, for instance, your trust would look very different than if you are trying to protect a child with special needs. As it sounds like you are trying to accomplish several things, you will need to enlist the services of an experienced estate planning attorney. He or she will be able to explain all your options, not just trusts, so that the plan you establish is tailored to your specific needs.
Legal Disclaimer: James A. Littlepage is licensed to practice law in Colorado, and as such, his answers to Avvo inquiries are based on his understanding of Colorado law only. His answers are for general information about perceived legal issues within this question only and no response to any posted inquiry should be deemed to extend any right of confidentiality between you and Mr. Littlepage, to constitute legal advice, or create an attorney/client or other contractual relationship. An attorney/client relationship is formed only by specific agreement including an evaluation of the specific legal problem and review of all the facts and documents at issue. We try to insure the accuracy of this information, but we cannot guarantee its accuracy. Laws change quickly, and the reader should always insure that legal information of any kind is up to date and accurate before relying on it. The reader should never assume that this information applies to his or her specific situation or constitutes legal advice. Therefore, please consult competent counsel that practices in the subject area in your jurisdiction and who is familiar with your specific facts and all of the circumstances.
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