Estate planning can be a complex process but it is essential in protecting one’s assets. After a lifetime of hard work, the last thing anyone would want is for it to fall into the wrong hands or be wasted on unnecessary expenses. Fortunately, this is the exact purpose behind developing an estate plan.
However, many people overlook its importance. According to LexisNexis, as many as 55% of adults in the United States have no will or other estate plan in place. All of these individuals’ assets will be at risk upon, and sometimes even before, their passing.
One such document that can keep your assets secure is a trust. These fiduciary provisions grant an outside third party called a trustee to hold any assets on the behalf of the beneficiary until designated otherwise by the grantor’s estate planning trusts. So what makes a trust so beneficial to both the agent and the beneficiary?:
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- Time frame: A trust not only designates who the trustee will pass the assets to, but also when; other estate plans may simply release them upon death. This can be beneficial in holding the assets until a beneficiary is more adept at managing money if at a young age.
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- Avoid probate: One of the most frustrating factors of ignoring the need for estate planning trusts is dealing with a probate. Probate court cases are extensive proceedings that can keep your family in court for anywhere from six months to two years while it is determined how to handle the assets. These proceedings can also cost a sizable amount of money in fees for court and probate lawyers to be taken from the assets.
- Taxes: While most trusts allow the grantor power to change the document at any time, a version called an irrevocable trust is an arrangement in which the grantor is unable to alter the terms and provisions. The benefit of this is that whatever assets are designated in the trust, may not be deemed a taxable portion of the estate. This will at least greatly reduce any taxes accrued upon the grantor’s passing.
Do not underestimate the power that estate planning trusts can have over assets and beneficiaries alike. With 41% of the vast and aging baby boomer generation not having a will or estate plan in place, many could soon be feeling the consequences. You deserve the right to control what you have worked so hard for.