Whether you’re getting an early start on your estate planning or have been procrastinating, creating a trust could give you a little more peace of mind, especially if you have a large estate. A trust is a legal contract that includes one or more trustees. It’s the trustee’s job to manage your assets according to your wishes. While creating a trust can be time consuming, there are some real benefits to this legal agreement. Here’s a few benefits of a trust.
Tax Benefits
Trusts can be revocable or irrevocable; a revocable trust can be amended after it’s created, whereas an irrevocable trust cannot. A revocable trust gives you the option to make changes, but may not lead to tax advantages. In contrast, an irrevocable trust can help lower your estate tax liability. If you gift your estate to an irrevocable trust for your beneficiaries, the amount can be exempt from estate taxes.
Avoid Probate
If keeping your affairs private is important to you and your family, a trust is a great way to achieve this. While assets controlled by your will have to go through probate to be verified and distributed, trust assets usually do not. Creating a trust can help you avoid a lack of privacy related to probate, and is often a quicker and simpler way to have your assets distributed.
Flexibility
Trusts are flexible, complex and come with both advantages and disadvantages depending on which type you choose. As we mentioned earlier, if you choose a revocable trust, you can change the terms of that agreement as the years progress and your relationships change. For example, if you get involved with a new charity and feel passionate about their cause, you would be able to amend your trust and set aside an amount to donate to that organization.
Control Your Money
A trust can also help you protect your property, even when you’re no longer alive. This legal document allows you to leave your assets to beneficiaries with conditions or restrictions. If you choose, you can have your beneficiaries receive payments throughout their lives as a way to prevent them from spending it foolishly. Or, you can provide money specifically for educational purposes like college tuition—no college, no money. Essentially, a trust allows you to dictate how your money is spent, whether you’re here or have already passed.
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As the most experienced CPA in the Inland Empire who specializes in working with seniors, Marcia L. Campbell is committed to helping each client thrive by caring for their personal and financial wellbeing with genuine interest, well-established expertise, and a focus on respectful partnerships. Marcia’s team specializes in a number of services including elder & financial care, court & trust accountings as well as private fiduciary and tax services. At Marcia L. Campbell, CPA, we understand the importance of our clients’ individual needs and are committed to helping them make the best personal and financial decisions for their future.