 | Advantages of Trusts
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What is a trust?
A trust is a legal entity that is
created for the purpose of transferring property to a
trustee for the benefit of a third person (beneficiary).
The trustee manages the property for the beneficiary
according to the terms specified in the trust
document.
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Why you might consider discussing trusts with your attorney
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Trusts may be used to minimize federal
estate taxes for married individuals with substantial
assets.
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Trusts provide management assistance for
your heirs.*
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Contingent trusts for minors (which take
effect in the event that both parents die) may be used to
avoid the costs of having a court-appointed trustee.**
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Properly funded trusts avoid many of the
administrative costs of probate (e.g., attorney fees,
document filing fees).
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Generally, revocable living trusts will
keep the distribution of your estate private.
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Trusts can be used to dispense income to
intermediate beneficiaries (e.g., children, elderly parents)
before final property distribution.
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Trusts can ensure that assets go to your
intended beneficiaries. For example, if you have children
from a prior marriage you can make sure that they, as well as
a current spouse, are provided for.
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Trusts can minimize income taxes by
allowing the shifting of income among beneficiaries.
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Properly structured irrevocable life
insurance trusts can provide liquidity for estate settlement
needs while removing the policy proceeds from estate taxation
at the death of the insured.
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*This is particularly important for
minors and incapacitated adults who may need support,
maintenance, and/or education over a long period of
time.
**With a court-appointed trustee, the
court must be petitioned each time funds are needed for the
minor. In addition, the assets are generally invested in very
conservative investments.
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