Creating a comprehensive estate plan is a crucial step in securing the financial well-being of your loved ones and ensuring that your legacy is preserved according to your wishes.
While a will is a fundamental component of estate planning, incorporating a trust into your plan can offer numerous benefits – not the least of which is that it can help you keep most or all of your estate out of probate and minimize taxation.
Here are some of the top reasons to consider adding one or more trusts to your plan:
1. You can protect yourself and your family in the event of incapacity
A revocable trust allows you to maintain control over your assets during your lifetime. Should you become incapacitated, however, your successor trustee – someone you trust and designate – can step in to manage the trust on your behalf without lengthy court involvement. That can allow for seamless management of your assets at a time when your family needs stability the most.
2. You have out-of-state property and want to avoid ancillary probate
Whether it’s a second home in Florida, a condo out in California or a cabin and some undeveloped property up the coast, having real property in another state usually means that your loved ones have to go through probate in both states. This additional probate process can delay the transfer of those assets and cost your estate more money, but property held in a New York trust avoids the ancillary probate problem.
3. You can tailor the asset distribution to each beneficiary’s unique needs
Trusts offer a high degree of flexibility when it comes to the way assets are distributed. Whether you have minor children, beneficiaries with special needs, or complex family dynamics, a trust enables you to provide specific instructions on how and when assets should be distributed. This tailored approach ensures that your loved ones are cared for in a manner that aligns with your intentions.
4. You can better protect your assets from losses
Certain types of trusts, particularly irrevocable trusts, provide an enhanced level of asset protection that wills do not. Assets held in such trusts may be shielded from creditors, offering an added layer of financial security. Additionally, trusts can be structured to protect assets from being divided in the event of a beneficiary’s divorce or death, preserving family wealth for future generations. You can also use Medicaid asset protection trusts to protect your assets from being lost to your long-term care needs.
If you’re contemplating making changes to your estate plan and adding a trust, the wisest thing you can do is seek experienced legal guidance to help you assess what’s most appropriate for your needs. That way, you can make informed decisions on the issues that will so profoundly affect your family’s future.