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Attorney Randy Ratliff

Grantor Trusts

Estate Planning Attorney Helping Nashville Area Residents

Planning for one’s estate, or for one’s future needs should a long-term disability arise, can be a challenging process. It is important to understand the different documents and tools that are currently available under Tennessee law and how they can be used together to effectuate one’s wishes. In addition to routine documents such as wills and powers of attorney, there are other vehicles, such as grantor trusts, that may prove useful for some individuals or couples. At the Randy Ratliff Law Offices, PLLC, Nashville estate planning lawyer Randy Ratliff offers a wide complement of estate planning tools, and he will be glad to discuss your legal options with you at your convenience.

Categories of Trusts

There are many types of trusts. Those that go into effect during the lifetime of the person establishing the trust are called “inter vivos trusts.” Those that do not become effective until after the maker of the trust has passed away are called “testamentary trusts.” The basic idea behind a trust is that a separate legal entity is created in order to hold or administer assets for the benefit of the beneficiary or beneficiaries of the trust. Trusts may be revocable or irrevocable; as the names suggest, the trustor has a right to end or modify a revocable trust during his or her lifetime, but an irrevocable trust cannot be changed or done away with in most instances.

Grantor Trusts and Taxation

With regard to trusts that are referred to as “grantor trusts,” income generated by the trust is taxed to the grantor (i.e., the person who established the trust) rather than to the trust itself or to the beneficiary. The concept of a grantor trust is, thus, a matter of taxation more than a matter of estate planning law. By their nature, revocable trusts are grantor trusts for tax purposes. However, in some instances, an irrevocable trust may also be considered a grantor trust for purposes of taxation. In determining whether a trust is a grantor trust, the amount of control that the grantor maintains over the trust is an important consideration.

A separate issue can arise regarding whether a trust is included in the grantor’s estate for purposes of federal estate taxation. This depends largely on the amount of power retained by the grantor and the particular benefits received by the beneficiary from the trust, but other issues may be considered as well. If you have questions about whether a grantor trust is right for you and your current estate planning needs, you should speak to an experienced estate planning attorney. Trusts can be a valuable estate planning tool, as well as an effective way to avoid probate, care for a loved one with special needs, or help the grantor become or remain eligible for need-based programs like Medicaid or TennCare.

Attorney Assisting Nashville Residents With Estate Planning Needs

At the Randy Ratliff Law Offices, PLLC, we understand that those who are ready to make plans for the disposition of their hard-earned assets and other future needs often have many questions about the legal devices at their disposal. We want each client to have a full understanding of not only the documents we ultimately prepare, but also other options that might be viable alternatives. We also encourage clients to consider the various contingencies that could occur in the future, including issues such as divorce, remarriage, and disability, and take these into consideration in making their estate plan. If you are ready to discuss your estate planning needs with an experienced lawyer, call our office at 615-656-8282. We serve clients in areas including Williamson County, Davidson County, Nashville, Cool Springs, Brentwood, and the surrounding communities.