If you are one of many people in Illinois who are age 55 or older, thoughts about your elder years or the time that will inevitably arrive when you pass from the earth may have started coming to mind. Especially if you have children and grandchildren, you might even be thinking that it’s time to explore estate planning options in order to prepare an inheritance for your loved ones. Incorporating a trust into an estate plan is often a wise thing to do.
Since there are several types of trusts, it’s important to do some research so that you understand the documents that are available and can determine which ones best fit your needs. Adding a trust to your estate plan can be helpful in several ways.
Adding a trust to an estate plan can help minimize estate taxes
As mentioned earlier, there are various types of trusts. An irrevocable trust is a contract that you cannot amend or change in any way after you sign it. Any assets you add to the trust may appreciate in time. However, one of the benefits of an irrevocable trust is that the assets contained therein will not be subject to estate tax after you die.
There may be gift tax requirements for which you would be responsible to pay while you are still alive. If one of your estate planning goals is to minimize estate taxes, then an irrevocable trust might be a viable means of doing so.
A trust enables you to control when and how assets are used
If you want to include specific instructions regarding money that you’d like to leave your children or grandchildren, incorporating a trust into your estate plan is a way to accomplish your goals. When you execute a trust, you may set parameters regarding assets in holding. Many people include specific age requirements, for instance, for how old a child or grandchild must be before accessing a trust fund.
You would also be able to specify how you would like people to use trust monies. For example, if you wish to give a gift to your grandchild, so that he or she may launch a business or go to college, you can include instructions in a trust that state exactly how the money you are giving to a loved one may be used.
You can amend a revocable trust at any time
As long as you are of sound mind when you do so, you can make changes to a revocable trust after signing it. Such changes may occur years after the trust is in place. You might want to add the names of family members who were born after the addition of the initial trust documents to your estate plan.
A revocable trust not only helps you protect a financial legacy, it also makes the asset distribution process a lot less complicated when the time comes to administer your estate. Someone with estate planning experience can help you determine which type of trust would be most useful to help you achieve your specific planning goals.