A trust is a legal relationship where the owner of an asset or assets gives it to another person or entity who must keep and use it solely for a third party’s benefit. In simple terms, a trust is essentially a document which helps you better control your assets when you pass on or if you become incapacitated. They have been used traditionally to minimize estate taxes and offer other benefits such as enhanced control which makes trusts a valuable part of an estate plan.
What assets can a trust manage?
Retirement accounts, a business, real estate, life insurance, and savings are the most common examples of trust-controlled assets. Assets and possessions like a vehicle can be placed in a trust, but this may not be the most tax efficient option available.
I already have a will; do I still need a trust?
This is a question we receive often. A will won’t necessarily protect your assets and your heirs from the probate court system. Probate is the first step in administering an individual’s assets who has passed away; resolving all their claims and distributing their property. A good estate plan protects your assets and heirs from this time consuming and expensive process.
Benefits of Trusts?
Bear in mind that not all trusts are created for the same purpose or created equally. This article is meant to portray a general outline of a trust’s qualities. We recommend consulting with a qualified legal professional.
Helps you maintain control – Don’t leave your heirs and your assets at the mercy of the probate system
Protect your legacy from your heirs’ creditors – Depending on how a trust is set up it can possess qualities that help protect your gifts from your heirs’ creditors
Maintains Privacy – The probate process is generally public record. Establishing a trust is a great way to ensure your family affairs don’t become public matter after your passing.
Don’t let the court make decisions for you – We believe your wishes, not the wishes of the court should be carried out when distributing your assets
Don’t pay probate fees – The probate system can lead to massive expenses; while they vary by state and case, it may be around 5% of the estate’s net value. $50,000 of a $1,000,000 estate.
Take advantage of tax planning built into an estate plan – Depending on their design, trusts can offer built in tax advantages.
It’s important to recognize that probate systems are state specific. This is another reason why we recommend seeking counsel from a licensed professional who understands your needs and your unique circumstances.
Not forming an estate plan is one of the 5 biggest estate planning errors
We have to come to terms with the idea we will someday leave our loved ones behind. We are powerless to that fact of life. We do have the power to live the life we choose while here on Earth, and to make the process following your passing as easy as possible for our loved ones. One very important way to keep your family from unnecessary hassles following your passing is by having a trust drafted to manage your assets.
Having your plan in order can bring you peace of mind. It’s fulfilling to know that you’ve done everything you can for your heirs. Click or call 440-871-3067 to speak with Michael Romanello about your estate plan and how a trust might be important.