Many people think estate plans are only useful for wealthy families and individuals. This view is deeply mistaken.
Developing an estate plan is an important tool for protecting your property and assets in the event of your death. This ensures that your loved ones receive as much of your estate as possible.
However, there are many legal options for planning your estate. Drafting a will is important for each estate plan. But a will has some limitations.
For this reason, you may wonder if a personal trust is a good option for your estate plan. Developing a trust can make it simpler for your loved ones to execute your wishes.
Personal Trusts Versus Wills
Personal trusts are a type of legal structure. Trust holders can transfer ownership of property and assets to the trust.
While the person is still alive, they can continue to use those assets. In the event of their incapacitation or death, the trust details how the assets should be handled.
When establishing a trust, you will name a custodian or trustee. This named representative will be tasked with carrying out the terms of your trust.
Establishing a trust allows you to:
- Remove the burden of decision-making from your loved ones
- Reduce or prevent the cost of estate taxes and probate
- Protect your assets in case of divorce
- Determine what should be done if you become incapacitated
- Control when and how your beneficiaries will receive inheritances
- Ensure the future of all assets in the trust
Wills are not always the best option for determining the future of an estate after a person’s death. For instance, it can be difficult to leave assets to anyone other than a spouse using a will.
In the event of their death or incapacitation, some people want their property to be transferred to:
- A non-spousal partner
- Children from a prior marriage
- Close friends
- Relatives
- Causes or charitable organizations
Your will must be probated upon your death, which means the courts must validate the document. The probate process can cost your family large amounts of money and time.
The probate process also makes it possible that your wishes will not be properly carried out. And your personal information may become public record.
A personal trust does not go through probate, which allows your loved ones to avoid significant financial and legal hassles. Speak with an estate planning attorney to determine whether a personal trust is right for you.
Different Types of Trusts
There are a few types of trusts. Those established after the death of the trust holder are called testamentary. If you establish a trust before your death, it is known as a living trust.
There are two primary types of living trusts. They are known as revocable and irrevocable.
Revocable Living Trusts
A revocable living trust is more flexible than others. After establishing this trust, you can adjust certain details, including:
- The property and assets owned by the trust
- Who manages the trust
- Who will benefit from the trust
Because it is a living trust, it must be established before the death of the trust holder.
Irrevocable Living Trusts
Although less flexible, an irrevocable living trust is also established during the person’s lifetime. Typically, irrevocable living trusts are established to avoid or decrease the amount of estate taxes the assets are subjected to.
While this is a good option for avoiding taxation, the parameters of the trust are unchangeable after it is established.
Contact an Estate Planning Attorney Today
For questions regarding wills and trusts in Palm Springs, CA, contact an accomplished legal professional at Heritage Legal, PC. Our firm will work diligently to guarantee that your property and assets are protected.