When you’re considering what will happen to your monetary funds in the event of your death, you may wish to choose living trusts. These accounts allow you to provide money for specific family members or charities.
When it comes to estate planning, individuals have many options. One of those options is to set up trusts for family members. Since there are many different arrangements, it’s best to consult with a legal expert who can guide you toward the right form of trust and help you set it up step-by-step. It’s also a good idea to discuss these arrangements with your family members.
When it comes to trusts, there are many advantages:
Your Family Members will Avoid Probate
Creating a living trust can save your family long hours in court and years before your inheritance is finally distributed to various family members. While you are still living, you’ll create these with a lawyer. Typically you designate a trustee who will oversee it once you’ve passed away. He’ll be sure that the funds will be used as you’ve designated them, and given to the appropriate people.
With a typical will, your family may be forced to go to probate court. This process can involve many different complications which take time and money to resolve. You don’t want your family to be paying the majority of their inheritance to cover the legal fees necessary to get it!
Your Family Members will Avoid Taxes
When money is left in living trusts, it incurs a lower tax rate. Sometimes there are extra loopholes which can cause the tax to drop even lower. However, if you simply leave a large sum of money to your family member without creating the trust, it’s subject to very high taxes by the government. We know that you’d like your family member to receive as much as possible!
The Funds can Provide Monetary Growth
If you’d like to ensure that your family will keep benefitting from their inheritance long after you’ve passed on, you can set up the trust so that your family gets payments over time, rather than a lump sum at the time of your death. Unfortunately, large sums of money are often lost through mismanagement. By creating this system, you can ensure that your family will not squander their inheritance all at once. Even after you are gone, your designated trustee will ensure that the payments are received by your family on a regular basis.
The Funds can be used to Benefit Your Favorite Charities
Instead of distributing all your monetary assets to your family, you can choose to give a designated amount to your favorite charities. In order for these charitable trusts to work successfully and fully benefit those charities that you choose, you’ll need to choose the specific organizations that you want to support, and how you want to support them. Will you give them a lump sum in the event of your death, or do you wish to keep contributing for years to come? As with a living trust created for a family member, your money can gain interest and offer payments for many years.