For some reason, perhaps owing to its use in popular culture via soaps, tabloids, and movies, the word estate seems to be applied to the very rich. In fact, when you have a property and other valuables after you die, those make up your estate. This may include a house, a car and the benefits from your life insurance. In this article, we will discuss how you can use trusts for your estate plan.
The Messy Probate
The probate court will decide what to do with the properties you leave behind once you’re dead. If you have a will, then this court will interpret this will for you and then proceed to transfer them to your beneficiaries.
Probate Can Be Costly
This process isn’t free. Your survivors will pay lots of fees. If you a haven’t left a will and you have two previous marriages along with children from those marriages, the probate court will have lots of work to do and also keep on charging fees.
Estate Planning Is a Must
While still physically and mentally healthy, a person must prepare his estate. He must determine who will get what asset once he moves on from earthly existence. He must write a clear and uncomplicated one. Should he make changes to it for a reason, it is better to scrap the existing will and write a new one. Or, he can create a trust.
Kinds of Trusts
The ones you mentioned in the will like the new owners of your properties after you die is one example of trust (testamentary trust). The other one is when you transfer ownership even if you are still alive (living trust).
Taxes Are Why There Are Trusts
When you do the latter, transferring ownership when you are still alive, the survivors won’t be involved in the messy probate procedures and the taxes that go along with estate taxes; because transferring properties means that they are no longer part of your eventual estate.
Revocable Living Trust Is Changeable
An advantage of creating a revocable living trust is that the person can make changes to it during his lifetime. He can add or delete beneficiaries, for instance. Or decide to dispose of money in a certain way.
A Trust Can Benefit Good Causes
Apart from providing income to your family, a trust can set aside money for your favorite cause. Yes, you can leave money to a well-meaning foundation. This kind of trust also lessens estate taxes.
Aging and Trust
One major reason why a trust has to be created while one is still physically and mentally fit is to prepare for a future when one becomes unhealthy. A good trust will take care of aging issues like expenses for health care.
Financial Management for Your Beneficiaries
The trustee is the person in charge of your properties after your death. He or she can be a spouse or any other family member. Sometimes, it works better if he or she isn’t. You might get a third party to do it, like a trust lawyer. Or better yet, since it’s money management that is at stake here, get an accounting firm like MKS&H feel free to contact us.