Making sure your family is taken care of even after you no longer can might be one of your top priorities. You've already begun estate planning and it is well thought out, but have you considered creating a trust yet? Some people think trusts are only for the ultra-wealthy, but this is not true. Creating a trust can be beneficial for families at any level of wealth.
Benefits of a trust
Trusts can provide a variety of benefits to families, making them worth the time and effort. Some of the benefits include:
- Avoiding probate
- Protection from creditors and lawsuits
- Distributing assets to heirs efficiently
- Creating conditions about how your assets can be used
- Multiple types and variations for customization
The benefits of these trusts are immeasurable and they can help your family in many ways even after you are no longer able to. Which type is best for your needs?
Types of trusts
There are a few different kinds of trusts, with main benefits, you can set up for your family:
- Credit shelter: part of your estate can be passed tax-free and shielded from estate tax.
- Generation skipping trust: allows you to transfer money to your grandchildren, tax-free.
- Qualified personal residence: gift your home to an heir, while keeping control for a period of time.
- Irrevocable life insurance trust: remove life insurance from taxable estate to help pay costs.
You may want to consult your attorney to figure out what the best type of trust is for you. An attorney can help evaluate your situation so you can make the best decisions. You will also want to make sure a trust is set up properly and well written in order to be effective. Creating trusts can benefit all types of families in many ways and they may be worth considering when estate planning.