Estate planning can be a complicated process. Of course, you want to ensure that your loved ones and family members will have access to assets after you pass on. You also probably want to make sure certain assets go to certain people. You may have minor children, special needs family members or even beloved pets who require care after you die. A trust is an ideal way to provide for all of those concerns.
A trust gets funded by assets either during your life or when you die. This specialized legal entity creates rules for the disbursal of assets in an estate. There can be limits placed on the use or withdrawal of funds. There can be conditions placed on certain inheritances. The person creating the trust can even make special protections for the ongoing care and financial support of special needs loves ones, young children and pets. Trusts offer those planning estates a wide range of benefits.
Trusts offer protection from estate taxes
Estate taxes, which are also called death taxes and inheritance taxes, involve the federal government and state government taxing assets passed from one generation to another. So long as the decedent passed on after July 1, 2014, your family will not need to pay any state estate taxes. However, larger estates are likely to incur federal estate taxes.
Georgia estates may still be subject to federal estate taxes. Estates worth $5.49 million or less are exempt from federal estate tax. Estates with a higher value may end up owing taxes. Using a trust for some or all of the assets in an estate can lower or even reduce the tax liability for the estate. Every estate is unique, so careful planning for taxes is a must if you don’t want to leave a tax burden to your heirs.
Trusts make it easier to avoid probate court
If you’ve gone through the work of creating a last will, estate plan or trust, you likely have specific desires for your assets and possessions. You want to know that your heirs will receive the items you allocated to each of them. If your estate ends up in probate court, your last wishes could end up overruled by a judge. The courts are less likely to overrule a trust than a standard estate plan or last will.
Creating a trust for you assets and estate can reduce the potential of a contested will. For example, funding a trust with a home can prevent siblings or others from fighting over who will inherit the house later. A trust can set clear expectations about who can inherit what and what conditions must be met to withdraw any assets from the trust.