Does your estate planning situation warrant a living trust? Here are three ways this amazing instrument shows its muscle:
#1 Trusts Protect Beneficiaries
Ed and Carol Bates cringed at the thought of their minor children getting their hands on their entire inheritances at the age of 18. All Ed and Carol had to do was think back to their level of maturity at that age to know that they wanted better for their three kids. Work911.com goes so far as to say that no one under the age of 25 should have access to an inheritance outright. The Bates agreed and created a trust that named a trustee for their children, someone who would hold the money and invest it for their benefit until they reached the age of 25.
#2 Trusts Can Save Money
Although there are no provisions in federal tax laws that exempt trusts from estate taxes, there are certain deductions and credits allowed. In addition to the $1,500,000 exempt from federal taxes, no estate tax is levied on property passing to a surviving spouse. In addition, marital deduction is unlimited, meaning you could transfer money to a spouse without paying estate taxes. While Kiplinger says that trusts are not for everyone, any married couple with a combined estate in excess of $1,500,000 should consider a trust in order to take advantage of the many tax-savings techniques.
#3 Trusts Provide a Plan for Incapacitation
David Lloyd never planned on reaching the age of 90. In fact, the World War II and Korea veteran was surprised to make it 40. Once he hit that milestone though, Lloyd’s concern became not dying, but living too long. He could not imagine a worse scenario than being incapacitated to the point where his children would step in and take care of his daily needs. He also abhorred the idea of being declared incompetent, having his personal and financial affairs paraded before total strangers.
The proud man found a solution he felt he could live with in a revocable living trust. This document allowed Lloyd’s successor trustee to take over in the event Lloyd became incapacitated. There would be no interruption in the management of his life and no embarrassing court supervision.
#4 Trusts Help Avoid Probate
Like life insurance, annuities, 40l(k) plans, IRAs, and company retirement plans, property in a living trust will not go through probate when you die. Further, if you jointly own property with rights of survivorship, it will not have to go through probate either, because it automatically passes to the surviving owner. While outstanding debts, taxes, and fees must still be paid before your assets are dispersed, a trust helps simplify the process after your passing.
Speak with an Estate Planning Attorney
If you wonder whether a living trust will benefit your estate, give us a call at Christopher B. Johnson, Attorney at Law, (888) 838-8771 for a confidential and thorough consultation about your needs.