A trust is used to protect valuable inherited assets and quickly liquidate the estate. Property placed within the trust can be distributed to designated heirs within a short period of time. Depending on the type of assets, estate assets placed in the trust may be exempt from inheritance tax.
Placing estate assets in a trust is the only way to avoid probate. The length of the probate can extend for a few months or a few years, depending on whether the decedents engaged in estate planning strategies prior to death.
There are several reasons for placing estate property in a trust. The first is the ease of distribution to your own. The second is the tax exemption of items. The third is to avoid probate and the fourth is to keep property matters private.
The last will and testament of the deceased is a matter of public record when the estate must support the probate process. The information contained in the will may be used by investors purchasing probate property. Those who prefer to retain their privacy should consider placing the estate property in a trust.
Setting up a trust is a relatively easy process. However, ensuring that the trust is run properly requires the assistance of a professional attorney or estate planner. There are a variety of trusts available, but the most common include life insurance trusts, probate, revocable, and irrevocable trusts.
Most people can establish their confidence in one day. The first step is to choose an estate planner to help in the process. A good place to start is to ask family or friends for referrals. Banks and credit unions often offer estate planning services at discounted rates for clients. Estate planners can also be located in telephone directories.
Setting up a trust can also help prevent family disputes over the distribution of inherited property. Death can cause people to become emotionally distracted and act inappropriately. Family members who feel they have been robbed of valuable property, or those who have been disinherited, often go to great lengths to acquire items to which they feel entitled. While placing items in a trust does not provide an unbreakable guarantee that will prevent heirs from challenging the will, it does minimize risk.
When looking for estate planners, it’s best to work with someone with whom you feel compatible. Estate planning is a personal task that can be emotional at times. After all, you are planning your death arrangements and making important decisions about who will receive everything you have worked your entire life to acquire.
Estate planners and probate lawyers often offer free consultations to assess needs and discuss fees. It’s smart to consult with at least three professionals to determine which one best suits your needs.
Trusts can be customized to meet your needs. Each type of trust has its own set of unique characteristics, but all are understood by four basic elements.
1. The person who establishes the trust is known as the grantor
2. Trusts are managed by a Trustee
3. Trusts have a principal
4. Trusts have beneficiaries
To transfer inherited assets to a trust, grantors must create an itemized property listing, along with property appraisals and legal titles for automobiles, real estate, and other titled property.
The principal refers to the money used to generate income for the heirs. The trustees may use the principal funds for estate-related expenses or for investment purposes. If the investment products are used to generate dividends, the income must be used for future investments.
Beneficiaries refer to the persons designated to receive estate assets. Grantors can leave property to whomever they want, but most property can be given to your spouse, children, parents, or siblings.
Trusts are typically reserved for estates valued at $100,000 or more. People whose properties are valued at less may engage in estate planning strategies that allow them to avoid probate. Estate planning is one of the best gifts anyone can leave their loved ones. Working with an estate planner or probate lawyers can ensure that you develop an unbreakable trust and avoid family disputes.