Many people believe that estate planning is only about dividing their assets after their death, but that’s not completely true. Estate planning is a way to gain control over your assets — both while you’re living and after your death. A simple will can help you accomplish this, too. However, a trust may be a better choice if you have complicated finances.
A trust is a fiduciary arrangement that delegates the management of a person’s property or funds to a third party on behalf of one or more beneficiaries. There are different types of trusts, and the right one depends on your distinct estate planning concerns.
Here are some of the top reasons to get an estate planning trust:
You Want To Protect Your Beneficiaries
A trust will help you protect your minor beneficiaries and also prevent the adult ones from losing everything to creditors, outside influences, and bad decisions.
You Want To Avoid Probate
If you have a will, the assets included in it typically need to go through the state’s probate process. Probate refers to the legal process of validating the will, appraising the assets, paying taxes and creditors, and distributing what is left to your beneficiaries. Probate is a lengthy process, and depending on where you’re located, it can be an expense.
On the other hand, with estate planning and trust, you can quickly and directly pass your assets onto your beneficiaries.
You Want To Avoid Estate Taxes
One of the top reasons people with a sizable net worth set up a trust is to avoid or reduce gift and estate taxes. For the tax years 2020 and 2021, you’ll only trigger estate taxes if you have an accumulated asset value of more than $11.7 million. If you’re married, a credit shelter trust can help your heirs gain control of your assets without paying for federal estate taxes.
You Want To Protect Your Legacy
A well-designed trust will protect your estate from creditors and lawsuits against your beneficiaries. If your beneficiaries are not adept at financial management, a trust can also stop them from spending all your assets in one go.
You Want To Keep Your Financial Affairs Private
A will — including the terms and details included therein — that goes through probate becomes a public court record. A trust will allow you to keep your finances private.
Not everyone needs an estate planning trust. For most people, a simple will is enough. To determine whether your situation requires one, it’s best to consult an estate planning lawyer. Steer clear from fly-by-night trust mills selling financial instruments that may actually do you more harm than good.
An estate planning legal advisor can help clarify the probate process and guide you through the necessary legal steps. If you have questions about probate or are embarking on the probate process on behalf of a loved one, contact the experts at Gallon Law.
Michael Dansack is a Partner with GT&B. Mike began his career at GT&B in 1993 and has created a strong track record of protecting his clients’ rights in issues such as bankruptcy, probate and estate planning, and general practice.
