To create a good estate plan, it is recommended that you consider setting up a few estate planning document to ensure that you are well catered to after your death. In addition, these estate planning document can ensure that the transfer of your assets is smooth, timely, and done according to your wishes.
One of the most important estate planning documents used in estate planning is a trust. Simply put, a trust is a legal vehicle that facilitates the transfer of assets from one party to another with the help of a third party known as the trustee. Trust come in two types: a revocable trust and an irrevocable trust. In this article, we’ll explain the role of a revocable trust is estate planning.
What is Estate Planning?
Estate planning is definitely not as exciting as planning for a vacation in Bahamas or a picnic on one of those serene and beautiful landscapes. However, even if it is not cable of providing you with the instant gratification you so much desire, this lone plan can help secure your future and the future of those you care about.
Estate planning in a nutshell, is all about making preparations for the transfer of your assets after your death. It consist of plans designed to ensure that you have a say on who inherits your assets. This plan can also be beneficial in the event that you become incapacitated, seriously ill, or unable to communicate.
What is a Trust?
A trust is almost similar to a will. In fact, in some cases, a trust can take the place of a will. A trust is simply a fiduciary relationship in which one party, regarded as a trustor, gives another party, known as the trustee, the right to retain assets on behalf of the beneficiary. Unlike a will, a trust is completely free from probate. A trust can be created with the help of an experienced estate planning lawyer.
Having known what a trust is, let us consider the types of trust that exists.
Types of trusts
There are two major types of trust, the irrevocable trust and revocable trust. However, for the purpose of this article, we’ll be considering an irrevocable trust.
Irrevocable trust
An irrevocable trust is a different type of trust. Unlike a revocable trust, an irrevocable trust cannot be changed, modified, or cancelled after its creation. As soon as the trustor transfers ownership of an assets or property to the beneficiary, no one, including the trustor, can remove the property from the trust. Whatever is done in an irrevocable trust is permanent.
How does an irrevocable trust work?
The main purposes of setting up an irrevocable trust are for estate and tax considerations. The benefits of an irrevocable trust for state assets is that it removes all incidents of ownership, thus removing the trust’s assets from the grantor’s taxable estate. It also relives the grantor of tax duties on the income the assets derives.
While tax rules differ per state, in most cases, the grantor can’t receive benefits if they designated themselves as the trustee of the trust. The assets placed in the trust can be a business, investment assets, cash, including life insurance policies.
Need an estate planning attorney?
Due to the complexities that surrounds the estate planning process, you may need the services of an estate planning attorney. With the help of an estate planning attorney, you should be able to not only plan your estate but update the plan later in the future.
An estate planning attorney can also offer you and your family valuable advice that could end up being a lifesaver. In addition, he can help in setting up various important legal estate planning documents like a power of attorney, healthcare directives, a living trust, etc.
If you want to plan your estate, and you need the services of an experienced estate planning attorney, please, don’t hesitate to contact us. Also, if you need help with updating your estate plan, you can contact our office as well. We boast of competent estate planning attorney who can help in creating an estate plan that suits your needs
