A vital part in estate planning is figuring out your intentions in retrospect with a property.
A will clearly communicates any wishes you may have and ultimately guarantees you control over the state in which you reside. Without a will, your assets will be distributed in accordance with the state. A will is especially significant if you have a trust.
A trust can be organized in a number of ways and entails that a third party, known as a trustee, may hold assets on behalf of a beneficiary/ beneficiaries. Trust can help minimize taxes, protect assets and avoid the probate process. Along with these benefits, a trust essentially allows you to determine the beneficiary whom your assets may apply to and when they may access them.
What types of Trusts are there?
There’s a large variety of trusts and each is assembled and designed in a unique way to accomplish your targeted goal.
• Revocable Trust: Living Trust. This can be altered and dissolved as long as grantor is alive. Assets may be kept out of probate but you might still have to pay estate taxes.
• Irrevocable Trust: This cannot be altered once created. Irrevocable trust is converted from a revocable trust when grantor dies. Grantor does not have control over assets but may protect beneficiaries from either probate or estate taxes.
• Asset Protection Trust: This is designed to protect an individual’s assets from any future creditors. This can better protect an individual’s assets from creditor attack.
• Charitable Trust: This benefits a charity of grantors choice or the public in general.
Similarly, a charitable remainder trust allots a specified amount of income toward a chosen beneficiary and the remained goes to specified charities.
• Constructive Trust: An implied trust set up by a court to change ownership of a property, to correct any wrongs that have been done.
• Special Needs Trust: This is set specifically for a person with special needs to supplement any benefits they may receive from government assistance programs.
• Tax By-Pass Trust: Created to allow one spouse to leave money to the other. This also limits the amount of federal estate tax that would otherwise be paid on the death of the second spouse.
• Totten Trust: Grantor may deposit money into an account at a financial institution in his or her name as the trustee for another.
• Marital/ “A” trusts: This places assets into a trust when one spouse dies. The surviving spouse will acquire the income generated by the assets.
An estate is everything comprising the net worth of an individual. With that in mind, we all have an estate! It consists of assets such as property and cars, as well as other personal possessions. Estate planning is important to ensure that your possessions get carried down efficiently and assigned to the person whom you chose. Additionally, you state when you want them to receive it. Essentially, you are setting a plan in advance which will help organize any wishes you may have for your prized possessions.