In the first part of our Estate Planning Series we discussed common mistakes that clients make when planning their estate. In this post, we will look into one of the best techniques to help you meet your estate planning goals, Trusts.
What is a Trust? A trust is a legal entity; it’s a living, breathing entity. It can be a tax-paying entity and can hold assets, participate in transactions, accumulate income, and distribute money.
Trusts are a great tool for estate planning because they can help accomplish certain behaviors and can provide some protection. For example:
• If you have a dependent that is in a rocky marriage and you leave their inheritance in a Trust, it is not going to be part of their marital estate. This means it would not be subject to property division during a divorce.
• If you have a dependent with a substance abuse problem, the Trust can control how much money they receive, to keep them from squandering their inheritance.
• If you are leaving everything to your spouse, the Trust can help protect the inheritance from a second marriage after you’re gone, and give the ultimate asset distribution to your children even though it provides for your spouse during their lifetime.
Another important type of Trust is a special needs trust. Special needs planning is an important aspect of estate planning for parents of a disabled child. The Trust can be structured to ensure the child will be taken care of for the rest of his or her life.
Trusts have strong appeal as an estate planning tool because they give you the ability to maintain some control, peace of mind and facilitate how things are done even after you are gone.
About the Author: Terri Lawson is an expert in estate planning with over 20 years of experience helping individuals and families plan for the future, address concerns and meet their estate planning goals.