When planning your estate there is a choice to be made between writing a will and creating a trust. While a will transfers assets to heirs at death, trusts operate differently. The grantor typically appoints themselves the trustee and retains control of the trust during the remainder of their life. Though living trusts have become popular, many people may not realize the general benefits of establishing a living trust.
Saving on Estate Taxes
For married couples with more than a $5.5 million dollar estate (the “cliff” in New York for wealthy estates where tax is paid on the entire estate), a living trust can be created for each spouse and allow the couple to pass $11 million state and federal tax free to their heirs rather than just $5.5 million. That’s a big difference in savings for your loved ones! A single person can pass $5.5 million in a living trust free of State estate taxes, as well.
Added Privacy by Avoiding Probate
Unlike a will, which goes through probate and becomes public record, a trust is not revealed to the public because it bypasses the public probate court. This means your assets, the trust specifics, and your beneficiaries remain private and your assets go directly to beneficiaries upon your death without distribution delay. Trusts are also more difficult to contest than a will, so there is less chance your trust will become public record due to the actions of a disgruntled heir attacking your estate plan.
Children from Earlier Marriages are Protected
You can specify under the terms of your living trust that both your children from a previous marriage as well as your surviving spouse can receive protection and fair treatment.
Guardianship Proceedings Will Be Avoided
In the event you are unable to manage your estate or become disabled, your living trust keeps you from needing a court-mandated guardianship for the assets in the trust. Whomever you have named as the successor trustee will seamlessly step in without government interference or unnecessary expense to manage your affairs.
You Can Control How Your Estate is Managed and Spent Even After Death
Your living trust can be structured to provide for the education, care, and support of children or grandchildren by designating an age when assets are turned over to them. You can even designate that life insurance proceeds be paid into the trust so the successor trustee can manage them for the benefit of your family members.
There are many upsides to establishing a trust as opposed to a traditional will. However, the most important thing is you have a plan for your estate to keep it from passing through probate. Our talented trust and estate attorneys at MOWK Law can help you make the best decision and come up with a plan that carries out your wishes and gives your estate maximum protection. Contact us today to learn more!