The Last Will & Testament is one of the most fundamental components of estate planning. If an individual dies without a simple will or revocable trust, then all estate property and assets will be allocated according to intestate laws rather the individuals specific, personal wishes or preferences. If a will based plan or trust based plan is not included in your estate planning process, it is possible that many loved ones with not be provided for in the way you had desired or expected.
Estate planning is also quite crucial for wise financial planning. By examining your interests from a five-year, ten-year and twenty-year viewpoint, you can make wise decisions in the present time to best protect you property and assets in the future. Additionally, estate planning can be useful by lowering annual estate taxes through the establishment of an irrevocable trust. Estate planning can also protect specific assets from being taken through lawsuits or legal disputes.
SETTING UP A TRUST
The use of trusts is great tool in estate planning. It is important to consult with a skilled Estate Planning attorney to ensure that the trust is properly set up.
5 THINGS TO KNOW ABOUT SETTLING UP A TRUST
1. THE ASSETS THAT PASS THROUGH A PROPERLY SET UP TRUST AVOID PROBATE- One of the great advantages of a trust is that the assets transferred to a trust during someones lifetime do not have to go through Probate proceedings. This can mean saving a significant amount of money for the estate in avoiding potential litigation in Surrogates Court.This also allows you a certain level of control of your affairs by ensuring that the money that you spent many years acquiring will definitely go to the parties that you intended. even in the best of scenarios Probate can be a lengthy process and passing those assets through a Trust is a great alternative
2. THE TRUST MUST BE PROPERLY FUNDED- Unfortunately there are times that one goes through the efforts fo properly setting up a trust but someone neglects to actually place assets into the trust. This results in foregoing many of the benefits of setting up the trust in the first place. This includes avoiding those assets that were in a trust having to be probated.
3.THERE ARE VARIOUS THINGS THAT CAN INVALIDATE A TRUST- It is important to consult with an experienced attoreny to ensure that the Trust is properly set up. Various factors can invalidate a trust. For example if the person setting up the trust retains some level of cotrol over the trust that can invalidate the trust. A trust that the the Settlor (the person who created the trust) has the ability to revoke after its creation will lost many of its benefits.
4. THE TRUST HAS 3 PRIMARY PARTIES. The Settlor (the person who created the Trust), The Trustee, the party who administers the Trust, and the beneficiaries.
5. THERE ARE TAX BENEFITS TO SETTING UP A TRUST- There are various tax benefits to setting up a Trust. Consult with your attorney to explore all the potential tax benefits.
OTHER PLANNING TOOLS
Drafting a Will: Besides for setting up a trust there is of course drafting a will. It is important to regularly update the will to take into account change of circumstances in a persons life.
Life Insurance Trust: Many people aren’t aware that for tax purposes, their estates might include the proceeds from their life insurance policies when they die. Depending on the value of the policy, this could invite an estate tax bill. But it’s avoidable. By properly setting up an irrevocable life insurance trust and it will reduce someone estate.
Drafting a Living Will: A living will is a document that sets out certain directives you have for incapacitation. This can include health directives such as when and under what certain circumstances to provide life sustaining care.
A well thought-out estate plan avoids numerous problems. An estate is a dynamic, living thing that develops and changes as the needs and status of its owner grow and change. Therefore, in most cases, our estate planning attorneys highly suggest that individuals, families and business consider estate planning throughout their life to reflect their evolving interests.