Any beliefs that estate planning trusts are just for the rich need to think again. In a nutshell:
- A trust allows you to decide how and when any assets you have will be dispersed after you die.
- They also have the ability to control or reduce things such as gift taxes avoiding probate court which many people have the frustration of having to endure.
- There are also trusts which create protection against greedy creditors or those wanting to gain what you have through lawsuits
In this article, we’ll look at the reasons you should consider trusts for estate planning especially if you have combined assets which run into the six figure dollar range.
Reasons For Estate Trusts
There are several reasons to consider estate trusts. Here are just a few:
- Real estate assets which comprise a good portion of your holdings or if you have a business or a valuable collection of any type such as art.
- To control the rate of dispersal of your estate to your heirs so to lessen the risk that they may not use the funds responsibly.
- To support your principal heir such as your current spouse but to also delegate parts of your estate to those loved ones from a previous marriage so as to not cause arguments after you pass on.
- You are keen to avoid too much tax payment thus maximizing your exemption entitlements.
- You may have a relative who is close and on some sort of health benefit or disability benefit but you want to include them in your provisions and you don’t want their benefits affected.
Estate Planning Trust Advantages
There are lots of advantages in estate planning trusts. Here are some of the major ones:
- You can still control how you have your assets dispersed and when they are divvied out after you pass on.
- Trusts are a great buffer against estate and gift taxes which if left unchecked, can quickly erode a goo portion of your assets.
- It allows you to avoid the ugliness of probate court which can eat up your assets by allowing you to have your holdings distributed without fuss and cost.
- A buffer of protection is created against those who feel they have a claim to your assets such as creditors and unfair lawsuits.
- You have the ability to appoint a trusted friend or family member as an estate planning trustee to manage the trust assets when you pass on or if you suffer some sort of condition which renders you as being unable to manage the trust yourself.
Estate Planning Types Of Trusts
The flexibility of trusts are one of their biggest benefits but they can also be complex. Many get confused with what type of trust they should explore and that decision can be made for you by an estate planning attorney who can examine your situation and recommend which route you should go down.
We’ve briefly listed the types of trusts there are and you should do further research on these:
Credit, Bypass or Family Shelter Trusts
Generation Skipping or Dynasty Trusts
Irrevocable Life Insurance Trusts Or ILIT
Qualified Terminable Interest Property Trusts or QTIP
Qualified Personal Residence Trusts or QPRT