When you think about estate planning, you may boil it down to a will or a trust. In fact, there are many different types of trusts. The benefits vary, and the optimal choice will depend upon your personal circumstances. Let’s look at some of the benefits that trusts can provide.
Straightforward Cases
In relatively simple, straightforward cases, a revocable living trust can be a very good choice. With this type of trust, you retain ownership of the assets, because you can revoke the trust if you ever choose to do so. The person who establishes a living trust can also act as the trustee and the beneficiary at first, so there is no loss of control while you are living.
One major benefit that you gain with a living trust is the avoidance of probate. A will would be admitted to probate, and assets would not be distributed until after the estate was probated by the court. On the other hand, the trustee that you choose to succeed you could distribute assets from a living trust outside of probate.
Since probate is time-consuming and potentially expensive, this is a major positive.
With a living trust, you can also include spendthrift protections. You could instruct the trustee to distribute a certain amount each month so that the beneficiary or beneficiaries would have resources to draw from for an extended period of time.
Advanced Estate Planning Objectives
There are other types of trusts that can satisfy more advanced estate planning objectives. These are going to be irrevocable trusts. You do in fact surrender incidents of ownership when you create this type of trust, and that separation can be beneficial.
For example, there is the matter of estate tax efficiency. High net worth individuals must be concerned about the potential impact of this death tax and its 40 percent top rate. Assets that have been conveyed into an irrevocable wealth preservation trust would no longer be part of your estate for tax purposes.
There are also irrevocable trusts that provide asset protection, and Medicaid trusts can be quite useful for some seniors. Many elders ultimately seek Medicaid eligibility, because Medicare does not pay for long-term care. Since Medicaid is a need-based program, there are asset and income limits. Assets in a Medicaid trust would not be counted.
Personalized Planning
As you can see, there are many different tools in the estate planning toolkit as it were. Each family is different, and each situation is unique, and this is why personalized planning is important.
If you would like to discuss your estate planning objectives with a licensed professional, our firm would be glad to help. We value our relationships with our clients, and we treat people the way that we like to be treated.
To attend a free Living Trust Seminar, register online through this page: Naples FL Estate Planning Attorney.
