A Massachusetts trust, commonly referred to as a “M.T.,” is a type of trust widely used in the Bay State to protect assets and manage wealth. There are different types of trusts available to suit different needs and situations, but each one creates legal duties and handles property in a particular way. Understanding how Massachusetts trusts work can help you make smart decisions about your finances and protect your wealth for generations to come.
What Is a Massachusetts Trust?
A Massachusetts trust is created when a person, usually the grantor, transfer’s legal ownership of assets to a trustee. The trustee is designated to manage the trust and distribute the assets in accordance with the trust’s written provisions. The trust can be irrevocable—meaning it cannot be changed after it is created—or revocable—meaning the grantor retains the right to change or terminate it. The terms of the trust dictate how the assets are invested, when and for whom income can be paid, and how the trust will be distributed when its purpose has been served.
Tax Benefits of a Massachusetts Trust
One of the primary benefits of a Massachusetts trust is that it generally reduces estate taxes. Property in a trust is no longer owned by the grantor, so is not included in their estate when they pass away. This provides additional tax savings. Additionally, some trusts are eligible for discounted rates on capital gains taxes, regardless of the grantor’s income level. Moreover, oftentimes, trust assets can be passed on to heirs and beneficiaries without having to go through probate, which generally results in considerable cost and time savings.
Examples of Massachusetts Trusts
There are a variety of trusts available to fit the needs and goals of different individuals. Some of the most popular types of trusts in the Bay State include revocable living trusts, irrevocable life insurance trusts, charitable remainder trusts, minor’s trusts, qualified personal residence trusts, and special needs trusts.
Final Thoughts on Massachusetts Trusts
A Massachusetts trust can be a useful tool for managing assets and minimizing taxes. It simply provides a legal vehicle for transferring ownership of assets that can then be managed according to the grantor’s wishes. Understanding the various options available and how they work can help you make the most out of your trust and protect your wealth for future generations.