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Should a Trust Be Part of My Estate Plan?

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A revocable trust can be a wise choice for managing your assets within your estate plan, says nj.com’s recent article entitled “What are the advantages of putting assets into a trust?”  A revocable trust is a type of trust that can be changed once it is executed by the creator of the trust, known as the grantor. During the life of the trust, income earned is distributed to the grantor. After his or her death, the trust assets transfer to the beneficiaries of the trust.

A revocable trust can be an advantageous estate planning tool because it has flexibility and provides this income stream and full access to the trust principal by the living grantor (also known as the trustor).

If you are the grantor, you can act as trustee, by yourself or with another as co-trustee.

When you no longer want to manage, or when you’re unable to manage your affairs, the co-trustee or a successor trustee can take over all of the duties.

If you didn’t put your assets in a revocable trust as part of your estate plan, you’d need to appoint an agent under a durable power of attorney to handle your financial affairs, if you become incapacitated.

However, some financial institutions would rather do business with a trustee instead of an agent under a power of attorney.

At your death, if all of your assets are in trust, your family can avoid the probate process. The trustee continues to manage the trust assets pursuant to the terms of the trust document. Those instructions do not need to be recorded any court in most jurisdictions.

Unlike a will, which is recorded with the government once it is probated, a trust is not a public estate plan document in most jurisdictions, including Florida. Therefore, privacy is another advantage of a trust within your estate plan.

Finally, in states where an inheritance tax return is required, a revocable trust also avoids the need to obtain tax waivers, which are issued by the state to release any tax liens, upon death.

However, there are some downsides to putting assets into a trust.

First, the expense of creating a trust will be more than a simple will, and you would still need a will in the event you did not place everything in the trust during your lifetime or upon your death by a beneficiary designation.

Sometimes, having all of your assets in trust can also be more costly or cumbersome. For instance, insurance may be more expensive when an asset is in the trust.

If you would like to discuss your estate plan with an estate planning attorney in Jupiter, Palm Beach Gardens, or Naples, Florida, schedule a complimentary call with Edward J. Welch at Welch Law, PLLC.

Reference: nj.com (March 17, 2021) “What are the advantages of putting assets into a trust?”

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