On our website, we often discuss the importance of planning for your family’s financial future and how trusts can be extremely useful, even if you don’t have a lot of assets. Once you have decided to begin the estate planning process, it is important that you talk to your attorney about the variety of trusts available and decide which type would be best for you.
One of the most popular trust options in Arizona is a revocable trust or living trust. Generally, revocable trusts are the best option for people who want to create the trust during their lifetimes and continue to make changes to the trust until they pass away. If you choose to create a revocable trust, you may assign a trustee to manage your estate if you are physically or mentally unable to handle your affairs. The trust can serve as a guidebook to distributing your assets when you pass away, and save your family from having to deal with the long, and oftentimes expensive, probate process.
There are some types of trusts that allow your family to potentially avoid estate taxes. For example, if you are married with children and a larger estate, and do not want to subject your heirs to an estate tax, you may be interested in an irrevocable bypass trust. When you pass away, a portion of you and your spouse’s estate will go into the trust and be given to the children without taxes when both you and your spouse pass. Your surviving spouse will have access to the remaining part of the estate.
Another common trust is a testamentary trust that only goes into effect after your pass away. Your will specifies which assets go into the trust, and when you die, they automatically get placed in there. Probate is still necessary with a testamentary trust, but you can avoid having to fund the trust when you are alive.
These are some of the most common forms of trust, but there are a number of other choices your attorney can advise you on. Talk to your attorney about your estate planning options as soon as possible.
Source: The Motley Fool, “Your 2017 Guide to Trusts,” Dan Caplinger, Sept. 23, 2017