The process of estate planning involves decision-making. You have a lot of options with regard to the way your assets will be transferred after you are gone. While the last will is the most commonly used estate planning document, trusts can be very beneficial under certain circumstances.
Let’s look at some of the advantages that various types of trusts can provide.
Probate Avoidance & Efficient Control
If you use a last will to record your final wishes, it would be admitted to probate after you pass away. The executor or personal representative would directly handle the business of the estate, but the administration of the estate would be supervised by the probate court.
The heirs do not receive their inheritances while this process is underway, and it is time-consuming. Though it can take longer under more complex circumstances, a best case scenario would be eight months to a year.
On the other hand, if you use a revocable living trust as your primary vehicle of asset transfer, the trustee that you name in the document could distribute assets to the beneficiaries in a timely manner after your passing, outside of probate.
Plus, you do not lose control of the assets while you are living. You can act as the trust administrator while you are alive and well, and you have the power of revocation, so you could dissolve the trust entirely if you ever chose to do so.
Estate Tax Efficiency
People who have accumulated significant wealth can be exposed to the estate tax. Those who are exposed could use a different type of trust to gain estate tax efficiency. These trusts would be irrevocable trusts rather than revocable trusts.
Special Needs Planning
Many people with disabilities are enrolled in the Medicaid program as a source of health insurance. This program is only available to people with financial need.
If you have a family member with a disability, you could create a special needs trust to improve this loved one’s quality of life. The trustee could use assets in the trust to make the beneficiary more comfortable, but benefit eligibility would not be forfeited.
You may have someone with poor money management habits on your inheritance list. There are trusts that can be used to protect assets that you are passing along to a spendthrift.
Schedule a Free Consultation
We have just scratched the surface in this blog post with regard to the value of trusts. If you would like to discuss your options with a licensed professional, we can help.
Our firm offers free consultations, and we would be glad to answer all of your questions. To set up an appointment, send us a message through this page: Grand Forks ND Estate Planning Attorneys.