A Key to Securing Your Legacy

Estate plans typically include either a Will or a Will and Trust combination.  Many clients ask whether establishing a Trust makes sense given their estate planning goals.  Below are three reasons why you may want to include a trust in your estate plan.

  • Avoid Probate Court Administration

Assets that are titled to a trust or become part of a trust by reason of death do not need to be administered through the probate court.  Such assets are to be held, managed and distributed as provided by the terms of the Trust’s agreement.  Contrarily, assets that are to be distributed pursuant to the terms of a Will are subject to probate court administration.  This is true even though the Will clearly states how a decedent’s estate is to be administered and distributed.  If you want to avoid the need for probate court administration, then you may wish to include a Trust as part of your estate plan.

  • Hold and Manage Assets for Minor Beneficiaries

Generally, a Trustee is given the authority to use the assets of the Trust for the benefit of the minor beneficiaries during the period of the Trust.  The Trust’s agreement may include directions to the Trustee regarding what the assets can be used for and when the assets ought to be distributed.  Without a Trust (which could be testamentary), a conservatorship will need to be established through the Court for the minor as a minor is unable to receive an inheritance in his or her name.  Conservatorships are overseen by the probate court and require conservators to annually report.  If you have beneficiaries who are minors, then you may wish to include a Trust as part of your estate plan.

  • Reduce or Eliminate Estate Taxes

The estate tax exemption per individual for the year 2019 is $11,400,000.  There are various types of trusts that can be useful to reducing the value of an individual’s gross estate for estate tax purposes or to taking advantage of certain tax strategies.  If your estate is significant in value, you may wish to include a Trust as part of your estate plan.

These are the most common reasons why a Trust may be beneficial. To understand if a Trust is an appropriate estate planning tool for you and your family, contact a member of the Rhoades McKee Estate Planning Team.