Although readers of this estate planning blog may have heard that trusts can be used to minimize taxes and preserve assets, it can always be helpful to provide specific examples.
As a preliminary matter, there are benefits available even if an estate is below the current estate tax exemption of $10.68 million. The most obvious is that creating a trust requires an individual to breach the topic of estate planning. Although mortality may be an uncomfortable subject for some, an attorney can remind individuals that estate planning is really about providing for loved ones and future generations in the event of incapacity or death.
For individuals with young children, having an estate plan in place is another way to provide responsible parenting. Through the creation of a trust, a parent can instruct a trustee to disburse payments to children as needed or based on specific occurrences, such as enrolling in college.
A trust is not always about restrictions, however. In the hands of professional management, trust assets can actually be viewed as a type of asset preservation strategy. Trust assets might be invested in various securities, for example, allowing for potentially bigger gains than funds sitting in a savings account.
Finally, estate planning can also be done in conjunction with retirement and other planning. In fact, having a will and various trusts in place may prepare families for every stage of life they may encounter. For example, trust can be created to provide for long-term care or other healthcare situations. Trusts can also be used to plan for changed financial streams in retirement.
For more information on the versatility of trusts and estate planning options, visit our firm’s estate planning page.