Many areas of the law are constantly changing based on a variety of factors. Estate planning is no exception, especially given that there are potential changes coming to the United States tax policy under the current administration. One of those potential changes is the elimination or restructuring of the estate tax. For individuals with trusts or considering establishing a trust as part of their comprehensive estate planning strategy, the elimination or restructuring of the estate tax may make people wonder how effective those trusts will be in achieving the goals behind their creation. Even with the potential for such changes, trusts are still an important tool when it comes to comprehensive estate planning that will continue to provide many important benefits like those below.
With or without the estate tax in its current form, trusts can help you avoid the headaches that often come with probate. By creating specific types of trusts to handle various assets and properly assigning such assets to those trusts, you can avoid the need to probate those assets This can save time and money, and can help ensure that your assets are distributed in the way you see fit.
Trusts help you create and maintain control over the distribution of your assets. For instance, creating a trust for certain assets will allow you to dictate how those assets are distributed to your heir. This can be an important tool for ensuring such assets are managed and distributed in a responsible manner to individuals that may not have experience handling those assets. It can also help you ensure the long-term viability of assets and create long-term financial security for your heirs.
Protection from Creditors
Depending on how a trust is structured, it can be designed to help protect assets within it from creditors. Not only can this help protect your assets from creditors that may have claims against your estate, but it can also help heirs that may inherit assets that could otherwise be diminished by creditors. Trusts can even help protect assets you leave to an heir from the potential impact of the heir divorcing, which can have a significant impact on assets they inherit outside of a trust.
Some trusts can be modified to fit your needs as those needs change. You may be able to “decant” assets from one type of trust to another, which is sort of like transferring those assets to a trust more suited to your needs. You can also cancel or dissolve revocable trusts and create a new one that addresses the current financial climate more appropriately. Not all trusts can be dissolved or modified, but creating one that can will help ensure that the trust can change as your goals for the trust change. Working with an experienced estate planning attorney is an important part of choosing the right type of trust initially, and an estate planning attorney that provides regular reviews of your estate planning portfolio is crucial to making sure that the mechanisms you have in place comply with current law and continue to meet your needs.