If you do not already have an estate plan in place, you likely have many questions about the wide range of legal tools that may be available for your interests. Some people believe that a basic will is all that is needed to create an effective estate plan. While a last will and testament is a vital estate planning tool, creating one or more trusts in a comprehensive estate plan may be necessary to achieve specific goals.
Understanding trusts can be beneficial in moving forward with setting forth how you want your legacy to be handled should the unexpected occur. Trusts can help you to protect assets for future generations, protect a loved one with special needs from being denied vital government benefits, minimize probate costs and potentially reduce exposure to taxes.
Trusts Are Flexible –And Allow You To Maintain Control
Trusts are not necessarily appropriate for every estate plan. However, there are situations where creating a trust is the best option to manage assets. Trusts can be more flexible that the directions for distributing assets outlined in a will. In February, we discussed how parents can create an incentive trust to encourage their children to accomplish specific goals to participate in an inheritance.
It is important to note, however, that you do not necessarily have to wait for the inevitable for a trust to become active. A will does not take effect until the testator passes away. In creating a trust, a person chooses a trustee to manage assets under the terms of a trust. A living will is a form of trust in which you can name yourself as the trustee, and designate a successor trustee in case you become incapacitated or pass away. The ease of transfer of power and assets is a true benefit of a living trust. Moreover, you can maintain control over your assets during life, while addressing how to pass along the assets in the trust after you pass.
Estate planning can seem daunting for most individuals. However, working with a focused lawyer can help you to ease your mind. To learn more about the versatility and potential benefits of using trusts in an estate plan, it is important to speak with a lawyer who will take into account important considerations, including your assets, your family dynamics and your goals.