When most people think about estate planning, they consider creating a will and not much else. A will is certainly a solid foundation upon which to build an estate plan. However, a comprehensive estate plan should incorporate the use of other documents.
Many people misunderstand the role of trusts in estate planning. Often thought of as a tool for the wealthy, a trust can benefit people from all walks of life. Here are four reasons why you should think about establishing a trust as part of your estate plan.
1. You can maintain privacy
If privacy is a concern, a trust can help keep the details of your estate hidden from public view. Trusts do not have to pass through the probate process. As such, any assets you place in the trust and how they are distributed will not be made part of the public record.
2. You can reduce estate taxes
Taxes can significantly reduce the proceeds your loved ones are expected to receive from your estate. If you have particularly valuable assets, such as multiple homes or a family business, establishing a trust can help minimize the tax hit on these assets.
3. A trust can help protect a loved one’s disability benefits
Disability benefits are based on strict income limits. If a loved one receives a significant inheritance, their benefits could be in jeopardy. When you create a trust, the trust effectively becomes the owner of whatever assets you place in the trust. This can enable you to pass assets through a trust without putting a loved one’s benefits in danger.
4. You can help avoid potential disputes
Real estate is often the single biggest asset people leave behind. Often, the distribution or sale of a home or vacation getaway can lead to in-fighting between family members. Placing your real estate holdings in a trust can help avoid contentious squabbles.
A skilled legal professional can help you identify your estate planning needs and determine the best way to help you achieve your goals.
