Going into an estate planning meeting may seem overwhelming and more than a little creepy. Making plans for after your death may lead some people to delay this incredibly important step in taking care of their family. Once in the meeting, however, you may find that an estate plan contains more than a will. You may find ways to keep your money protected from Uncle Sam and probate, as an estate attorney, like from Klenk Law, can explain. You may believe that a trust account exists for those with an overabundance of wealth, but that is not the case. Discover more about this multi-faceted, multi-use fiduciary arrangement.
The Purpose of a Trust
When a person dies, their assets are tabulated and handled through the probate court. Debts are paid, and when that task is completed, the remaining amount is disbursed according to the will. The entire process may take months to complete. In the meantime, your family may be left in a lurch without access to that money and property. A trust account helps deliver money quicker to the intended recipients. Property and cash get deposited into the trust for the benefit of a grantee. This person is the intended heir and beneficiary of the trust when you, the grantor, dies. A trust bypasses probate, and since the items within it are not in your name, they do not get tabulated into your net estate for the calculation of taxes.
What a Trust Can and Can Not Do
A trust account can hold almost anything you deposit. People typically use it to keep items and cash away from taxation and to aid with getting things to heirs quicker. A trust may have a condition up it; something gifts in wills cannot have. For example, a grantee may only get the benefit of the trust after they turn a certain age or get married. When making your will, you cannot indicate the trust go to anyone, but the grantee listed on the trust paperwork.
The Types of Trusts
There are quite a few different trust types. Some of them apply to those who own a business while others are charity-based. The two most common types of trusts are revocable and irrevocable. When you establish a revocable trust, you want to retain control over the items within it during your lifetime. You can move property in and out of the trust account at will. An irrevocable trust, on the other hand, is a permanent action. Whatever you place into that trust remains until your death. Only then can the grantee move or make changes to the trust.
Understanding trusts may help you decide if creating one is in the best interest of your family. Speaking with a local estate planning lawyer can help you reach this decision.