While trusts can be very beneficial for certain people, they are not the universal solution to optimal estate planning. Read the information below to help you determine if establishing a trust may be a beneficial tool for you.
Who Should Create a Trust
Though trusts are often a useful means for planning an estate, creating one may not make sense for you. Regulations over trusts vary from state to state. However, typically, trusts can be helpful for people who own a home and other property, have a net worth exceeding $200,000 or who want the distribution of their assets to go as smoothly as possible. Further, trusts can be useful for people whose estate is deemed taxable by the state of residence or who want to specify certain conditions on the inheritances their heirs receive.
Which Assets to Include in a Trust
In order to add assets to a trust, you will retitle your assets’ ownership to that trust.
There are certain assets that are appropriate to fund your Trust. To accomplish this part of the process, you will retitle assets with the Trust as the owner. A trust can hold many types of assets including:
- Retirement funds
- Tangible items (vehicles, antiques, jewelry and more)
- Real estate
- Investment accounts
- Bank accounts
The Difference Between a Trust and a Will
The most important difference between a trust and a will is when they become effective. Trusts are effective immediately after being created, while wills go into effect after the person passes away. Additionally, wills and trusts are taxed differently. Lastly, a will is normally made public and goes through probate while a trust can be kept private and avoid going through probate.
Role of a Trustee
A trustee is the legal owner of a trust. This person is responsible for distributing assets to the beneficiary as prescribed in the trust. It is possible to have a trustee removed from the role in certain instances. Those instances include if he or she has not fulfilled their responsibilities, if he or she no longer wants to act in the role, or if he or she is incapable of doing so. A trustee must never utilize trust funds for his or her own personal use.
Whether or not you should create a trust is a decision that ultimately only you can make. Exploring your options and making sure that you fully understand the solutions available to you is essential. Call an estate planning lawyer, like the ones from Klenk Law to walk you through your concerns today.
