If your goal is to ensure your own comfort later in life while preserving wealth for future generations, a trust may be an effective tool in your estate plan.
There are many different kinds of trusts to consider, so it is important to choose a trust that fits your specific situation.
A trust can be used to avoid probate, minimize taxes and preserve property such as real estate.
Because a trust is considered to be separate from the estate, the assets placed in the trust can be kept out of probate. That means your estate can avoid probate costs while minimizing the complexity of the probate process.
Additionally, an irrevocable trust can provide you with income during your lifetime and allow for assets to be passed to heirs tax-free after your death.
If you have questions about avoiding probate and estate taxes, an experienced estate planning lawyer can explain your full range of options.
With a trust, you can determine how and when assets should be distributed to beneficiaries.
Many kinds of trusts exist to achieve specific goals. For example, a spendthrift trust does not allow the beneficiary to sell interests in the trust, which is also protected from the beneficiary's creditors until the property is distributed. Also, you can determine how and when the assets in a spendthrift trust are distributed.
If you have a loved one with special needs, you can create a special needs trust. If properly established, a special needs trust can provide for your loved one while ensuring that he or she remains eligible for government benefits. The rule here is that the trust beneficiary cannot control the frequency or amount of distributions, which are typically controlled by the appointed trustee.
For more on estate planning options for preserving real property, please see our previous post, "Know the Benefits of Forming a Real Estate LLC in Hawaii."