Asset Protection Trusts – The Basics
As you begin to think about future planning for your estate and/or you begin to assist elderly loved ones with their estate planning needs, you’ll run across a number of different options for passing on possessions. You can write a will and/or create a trust. There are several different kinds of trusts to consider before settling on one, and this post will help you determine whether an asset protection trust is a good idea for your estate. Here are the most commonly asked questions about this type of estate plan:
How Does Asset Protection Differ From a Regular Trust?
A trust usually benefits those who want to place assets into the hands of another individual before or after death on behalf of any beneficiaries. This is a common practice, but an asset protection trust takes things a step further by limiting the ability of creditors and lawsuits to gain access to a person’s assets. This is a beneficial approach for those who are worried that they might be sued, such as business owners, and those who are concerned about creditors coming after their property.
Is It Irrevocable?
An asset protection trust is irrevocable, meaning that once it is created, it cannot be undone. You’ll need to be sure that your beneficiaries are set in stone and your decision on how affected property should be distributed is permanent. This approach stands in contrast to a will, which can be modified as many times as you care to. The reason your assets are protected from creditors via an asset protection trust is that these assets are no longer accessible to you as well. Therefore, you must be steadfast in your decision when you make the trust.
Does It Avoid Taxes?
Estate taxes are a large part of planning for the future of your property or your elderly loved one’s property. An irrevocable trust can avoid estate taxes in several different ways, but these “ways” are nuanced. State laws vary in this regard, so speaking with a lawyer is suggested when determining whether your trust can avoid taxes. While you may avoid paying taxes, your beneficiaries may have to pay them upon receiving your estate.
Does It Avoid Probate?
Probate is a pesky process required to legally legitimize and outline the wishes of a will. It requires court involvement and can take a long time to carry out. It also leaves room for disputes among family members over how the property is divided. Most trusts avoid this entire process, which can be a relief to family and friends.
Talking to a trusted estate planning and elder law lawyer, like those at McCarthy Law, LLC, about the future of your assets and discussing whether this kind of trust is right for you or your loved ones can help to clarify your options in a way that self-guided research just can’t. A lawyer can both walk you through the process and be the witness for the creation of a will or trust. It is an option worth considering.