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Trusts: Good for a Variety of Families

 

A trust can be a useful estate-planning tool for lots of people — not just billionaires. Is a trust right for you? There are two main reasons why you would consider creating one. One is that you have a net worth of at least $100,000, a substantial amount of which is in real estate. The other is that you have very specific instructions on how and when you want your estate to be distributed among your heirs after you die. Trusts also are great for protecting your estate from lawsuits and creditors.

It's well documented that most people do no estate planning. Of people who do, most use a last will to pass their estates to a spouse or divide it among their children. Most don't establish a trust, but if you want multiple heirs to share your assets after your death, your plan will benefit from a trust.

Here are other reasons to set up a trust:

  • To protect beneficiaries.
  • To avoid court-supervised probate of trust assets and protect your estate's privacy.
  • To protect premarital assets in the event of a divorce.
  • To set aside funds to support you if you become incapacitated.
  • To manage indivisible assets such as vacation homes and recreational vehicles.
  • To manage closely held business assets for planned business succession.
  • To hold life insurance policies.
  • To efficiently give to charities.
  • To provide money for a disabled person without making them ineligible for Medicaid.

Work with professionals

If you want to set up a trust, consult an estate attorney who will guide you through the various types of trusts and help you decide which best suits your assets and goals while helping you make sure it's legally sound.

A basic trust plan will run upward of $1,000, and costs can vary by state. The more complex the trust, the more it will cost, and updates over time will add additional fees.

Your estate attorney likely will notify you if you need to update your trust for legal reasons, but you may have reasons to update the trust, such as to change beneficiaries or investments. It's best to consult your lawyer every few years to make sure your trust remains up to date.

Trusts are flexible, varied and complex. Each type has advantages and disadvantages, which you should discuss thoroughly with your estate-planning attorney before setting one up. Assets you want protected by the trust must be retitled in the name of the trust. Anything that's not titled to the trust when you die will have to go through probate. The trust document gives you, another person or an institution the power to hold and manage your money for your benefit or the benefit of other people.

Let us know if you'd like to discuss how a trust may help you.

 
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Siegel Solutions Inc
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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