Protecting Your Estate Beneficiaries
One of the best ways for you to protect the interests of your estate beneficiaries both during your lifetime and after your death is by establishing a financial trust. In simple terms, a trust is a document which lets you, acting as the "trustor," transfer your assets in a way that will benefit your "beneficiaries." And when your estate is involved, there are two distinct types of trusts. The first type, the "inter vivos," or living trust, is one which you will create to be active during your lifetime, while the second kind, the "testamentary trust," will be incorporated into your will and will only become effective on your death.
One way in which a living trust can protect your estate beneficiaries is by eliminating the need for the assets it contains to go through the probate process. The probate procedure is required to ensure that your will is valid, and to see that your estate is administered according to the rules in your state. A testamentary trust, on the other hand, will require that your assets are probated before they can be distributed according to the terms of the trust. But either type of trust, with the tax advantages it provides, can protect the interests of your estate beneficiaries. A living trust, while it will keep your assets out of probate so that they are quickly available for the use of your estate beneficiaries, will also allow you the full use of those assets during your lifetime. If your living trust is designated as revocable, you will be able to change its terms and beneficiaries any time you choose; an irrevocable living trust is one that you cannot alter once you have signed the trust document. Most living trusts are designated revocable. A testamentary trust is by revocable by its nature as a part of your will, which you are free to alter any time you want. But as far as your estate beneficiaries are concerned, the desirability of your having of a living trust seems clear. A living trust will contain provisions for how your financial and personal affairs will be managed should you become incapacitated. You will appoint a Successor Trustee to handle them, and avoid the necessity of a court-appointed guardian. But the biggest advantages of having a living trust is that the assets it contains will no be considered taxable in terms of the estate you leave, and that can save your estate beneficiaries a considerable sum. Add to those savings not having the expense and delay of a probate procedure, and your living trust will make dealing with your loss much easier on your survivors. If you are someone concerned about what will become of a minor or disabled child upon your death, you might prefer a testamentary trust. These trusts will let you stipulate how what you leave to your minor estate beneficiaries is managed for their use You can even control how they will receive their inheritances after they become adults, by stipulating when it will be distributed to them. Both types of trusts can also protect your estate beneficiaries as asset protection trusts which keep your property away from future creditors. But before deciding exactly how you want your estate planning to meet the needs of your beneficiaries, spend some time with a knowledgeable estate planner. It's the best way to ensure that your final wishes will be carried out. |
