Simon & Gilman, LLP Serving Queens and NY Metro area for over 35 years
Free Consultation 718-267-8542718-459-6200 SE HABLA ESPAÑOL

Using a trust in your estate plan could be a smart move

Estate planning can be a complicated process. Thankfully, the sooner you begin planning for your passing, the better prepared you are to enjoy your life. When you know that issues like your medical preferences (like organ donation or life support) and the division of your possessions is handled, you'll feel more prepared for the future. After all, you don't want to leave your family with debt, taxes or other issues to sort out after grieving you. You want your legacy to be more positive than that.

For those with substantial assets, special considerations for division of their assets or special needs family members, creating a trust is an ideal estate planning solution. For families whose assets exceed the maximum allowed amount ($5,490,000 in 2017), estate taxes could prove to be a real burden. Trusts can help your family avoid most tax liabilities associated with a large estate.

Determine what trust is best for you

There are many different kinds of trusts, so you need to consider which kind is best for your situation. There are four main kinds of trusts, and many variations of each kind, depending on your situation.

  • Irrevocable trusts involve giving control of the trust to a trustee. That means that when the trust gets enacted and funded, you hand over control to the trustees. When that happens, you can no longer control the trust, the beneficiaries or the assets within it.
  • Revocable trusts get controlled by their creator. That means you retain ongoing control over assets in the trust, the trustees handling the trust and the beneficiaries of the trust. Revocable trusts are often living trusts.
  • Living trusts get enacted while the person creating and funding the trust is still alive.
  • Testamentary trusts, on the other hand, only become effective with the death of their creators.

There are other kinds of trusts which could be living or testamentary, revocable or irrevocable. For example, special needs trusts are created to provide resources and care for a special needs family member in the future. Limits and requirements for dispersal protect your loved one from having the assets squandered or diverted by a caregiver. Family trusts may place special assets aside for your spouse and give your spouse control over the trust, your estate and all assets until your spouse passes on.

Trusts can provide excellent protection from estate taxes, as well as a host of unique benefits that fit your situation.

Funding your trust

It's important to understand that a trust isn't worth anything until it is funded. You fund your trust by transferring assets to it.

Depending on the kind of trust and your intention in creating it, you could transfer all financial assets, your home and other valuable assets to the trust while still living. What you choose to use to fund your trust could have an impact on the kind of trust you use.

No Comments

Leave a comment
Comment Information