Perhaps you want to use trusts to bolster your estate plans. Of primary concern is how you might use them to protect your estate and provide guidance for your loved ones. Trusts allow you to maintain some control over your assets and help to minimize inheritance disputes.
The effectiveness of your estate plan rests on how well you use the resources it provides to protect your legacy and loved ones. Here are some key pointers to consider when using trusts in your estate plans.
Trusts preserve the grantor’s intent
Irrevocable and revocable trusts offer considerable benefits to estate plans, such as privacy, minimal probate involvement, etc. Beneficiaries of irrevocable trusts enjoy the protection it offers from lawsuits, taxes and creditors. Irrevocable trusts are generally rescindable and offer some protection for your assets while you are living. Revocable trusts, however, are amendable at any time and do not go into effect until the grantor’s death. Also, revocable trusts do not provide the same, if any tax benefits.
Trusts must have funds
Simply creating a trust is not enough to solidify your estate plans. Trusts are not valid until you transfer assets to or fund them. If you do not assign your assets to their appropriate trusts, your heirs could miss out on a portion or all their inheritances. Assets that fall under trusts become subject to control by the trustee.
Some financial assets like certain life insurance and retirement accounts have death transfer requirements that supersede those in a trust. It is important for you to review your estate plans frequently, especially all beneficiary and trust information to ensure adherence to your final wishes.