When you want to set up an estate plan that includes a quicker way for your beneficiaries to get the money you allocate, you may want to look at establishing a trust. If you have never heard of this type of fiduciary preparation, you may want to do some digging. Trusts allow you to accomplish many things while they are alive and then continue after their death. Take a peek at some of the things you can achieve by establishing a trust as part of your estate plan.
Trusts Are Not Part of the Probate Process
One of the most significant benefits to creating a trust is it is not subject to probate. Even if you leave a will, some states require your estate to still go through probate court before assets can be distributed to your beneficiaries. The entire process can take time, delaying the delivery of your final wishes and property to your designees. If you want your heirs to get the property or assets you designate quicker, a trust can accomplish it.
Place Items in the Trust to Avoid Estate Taxes
Trusts make an excellent shelter to place property and assets that you want to keep safe from estate taxes. When you leave items in your will, they may be taxed, and your heirs are the ones who have to pay those taxes. Passing larger ticket items, like more considerable sums of money or property, through a trust can keep them tax-exempt. Because a trust does not pass through probate, it also does not become part of the public record. Therefore, if you want to keep your beneficiaries away from creditors or protect them against other claims by less responsible heirs, a trust would work.
The Type of Trust Matters
While there are many types of trusts that all have distinct roles in distributing money, the two main types are revocable and irrevocable. In a revocable trust, also called a living trust, you as the grantor can move property and money in and out of the trust at will during your lifetime. This allows you to keep control over what goes in and stays in. If at any time during your life, you choose to dissolve the trust, you may do so without penalty.
An irrevocable trust, however, is a one-time transfer of assets out of your hands and into the shelter of the trust. Doing this allows you to permanently place assets out of your control and into the trust for transfer to your beneficiaries upon your death.
Creating a plan for how your money and property gets distributed after your death may include a trust. Speaking to an estate planning lawyer can help execute your final wishes.