Six Reasons to Consider Creating a Trust
Control Asset Distribution. Your beneficiaries may not be prepared to manage their inheritance. You can create a Testamentary Trust and appoint a Trustee who will make distributions to your beneficiaries according to your wishes. For example, your Trust might stipulate that your Trustee make money available for college tuition or make distributions outright to a beneficiary when he or she reaches various ages that you select.
Protect Assets from Spendthrift Beneficiaries and Creditors. If a beneficiary does not handle money responsibly, you can place assets into a Discretionary Trust from which your Trustee can make discretionary distributions directly to the beneficiary or for the beneficiary’s benefit. Additionally, Discretionary Trusts can protect your beneficiaries from legal actions brought on by their (and their spouses’) creditors.
Provide for a Special Needs Beneficiary. Giving property outright to a beneficiary with special needs might disqualify him or her from receiving government benefits. Placing property into a Special Needs Trust can minimize the risk of the beneficiary’s losing out on the benefits.
Achieve Beneficial Tax Treatment for Retirement Accounts. If you are concerned a non-spouse beneficiary will liquidate a retirement account without taking into consideration the immediate income tax liability, you can name a Conduit Trust as the beneficiary of your retirement account. This Conduit Trust can limit withdrawals to your retirement account’s annual required minimum distribution (RMD) and provide protection from creditors.
Keep Assets in the Family. If you are concerned that after you pass away your widow or widower will remarry and that your assets will eventually end up with her or his new family, then a Qualified Terminable Interest Property (QTIP) Trust can provide income for her or him, while ensuring that when she or he passes away, the assets remaining in the QTIP Trust will pass to the beneficiaries you choose.
Avoid Probate and Protect your Privacy. Depending on what state you live in, probating a Will can be expensive and time-consuming. A Revocable Living Trust can help avoid the probate process and save money for your beneficiaries. Also, a probated Will is a matter of public record, whereas the terms of a Revocable Living Trust are not made public, thus ensuring your family’s privacy.
Smart estate planning lets you determine the distribution of your property to protect your loved ones in the most efficient manner. If you are interested in creating or updating your estate plan, we at The Becker Law Firm would be happy to help you.