A comprehensive estate plan has many components that let your loved ones know how to handle your assets when you die. One component that’s in some estate plans is a trust. When you establish a trust and transfer assets into it, the trust holds those assets until it’s time to distribute the contents to your loved ones. A trustee is placed over the trust to manage the assets.
One of the most important benefits of trusts for most people is that they bypass probate. This provides the beneficiaries with privacy. Wills must go through the probate process, so the information becomes part of a court record that’s viewable by the general public. Remember, assets that are included in a trust don’t have to be listed in your will.
What is an irrevocable trust?
The creator can’t modify an irrevocable trust without the permission of the beneficiaries. Once these trusts are established and funded, the creator doesn’t control the assets. Instead, the trustee is solely responsible for caring for and administering the trust.
While irrevocable trusts are more difficult than revocable trusts to set up, they offer benefits that revocable trusts don’t. The contents of an irrevocable trust are shielded from creditor claims because you don’t have control over the assets.
This type of trust also provides tax-shelter benefits, which offer wealth preservation for you to pass down to the next generation. This helps your loved ones to receive the biggest inheritance possible.
What is a revocable trust?
A revocable trust is one that the creator can modify without needing the permission of the beneficiaries. They can also dissolve it if they want. Revocable trusts don’t protect from creditors, and they don’t offer tax-shelter benefits. They’re typically easier and less costly to establish than irrevocable trusts
Getting your estate plan together now can help you have peace of mind since you know your loved ones will have a plan to deal with your assets. Working with someone who’s familiar with estate planning and understands your unique situation can help you craft a suitable plan.