When you create a trust, you’re taking advantage of numerous benefits. For example, you’ll save your family the time and money associated with probate court. If you owe estate tax, you can help lessen the burden. While one advantage may be more important than others – it all depends on your family’s particular situation.
The most popular advantage to a trust is avoiding probate court. Probate is the process your estate goes through after you pass away. When you set up a trust, you usually name yourself as the trustee and all property is transferred into the trust. A successor will be named to manage the trust and the property once you are gone, which avoids the need for probate court.
Your typical will doesn’t lay out a management plan for your assets. A trust, however, is a detailed legal document that provides instructions to your successors if you’re incapacitated or if you pass away. Your instructions can limit a successor’s power, specifically state what he or she may do with your assets, etc.
If your estate is subject to federal estate tax, you will want to take precautions to avoid this. One way to do so is by setting up a trust. Federal estate taxes are burdensome and can quickly drain your estate and keep your beneficiaries from their inheritances. Through careful planning you can help them avoid this cost and reduce your estate’s tax liability – if not eliminate it altogether.
If you’re considering a trust, speak to an estate planning professional. An attorney can help you get started and see if a trust is right for you.