Top Reasons to Consider a Trust
Most people are aware of the function of a last will and testament. Your will dictates what happens to your estate after you pass away. Many people believe that that’s the extent of any estate planning they’ll ever need. However, there are many other estate planning tools that many more people can benefit from, regardless of income or asset level. Read on for reasons why you might benefit from establishing a trust during your lifetime. For considered advice on planning your estate, call a dedicated Vancouver estate planning attorney.
Avoid Estate Tax
One of the principal uses of trusts is to keep and distribute assets without triggering the estate tax. Current law sets the estate tax exemption at $11.7 million for an individual and $23.4 million for a married couple. For most people, then, the federal estate tax is not a real concern. However, that tax exemption is set to revert to $5 million in 2025. If you believe your estate may be worth more than $5 million now or in the future, you might wish to consider using a trust to prevent the government from taking a big chunk of your estate away from your spouse and children.
Provide Income Without Affecting Needs-Based Program Eligibility
There are several special kinds of trusts that serve specific purposes. If you have a child or another loved one with a disability or special need, they might be eligible for needs-based programs such as Medicare or Social Security. If their income or assets are above a certain level, they could lose that eligibility, costing them much more in health insurance and medical costs over time. A special needs trust can provide extra income for individuals with special needs without affecting their eligibility for these programs. You can also establish a self-settled special needs trust to ensure you have a source of income in the event of your own disability down the line while maintaining your eligibility for needs-based governmental programs.
Protect Assets from Creditors
When you put assets into an irrevocable trust, those assets no longer belong to you. They belong to the trust. If you intend to distribute those assets to your children or other beneficiaries, establishing a trust may be more beneficial than keeping ownership of those assets to be distributed in accordance with your last will and testament. At any point during your life, or during probate, your assets can be attached by creditors. If your assets are in a trust, benefiting your child or another party, those assets cannot be accessed.
Protect Beneficiaries from Themselves
You might want to leave a substantial inheritance for your children but wish to set restrictions on when and how they can use the inheritance. For example, you may want to wait until your child reaches age 21 or graduates college for them to receive their full inheritance. With a trust, you can craft when and how the trust assets are distributed to the beneficiaries. You can create the trust now and set whatever parameters you wish about when and how trust assets will go to beneficiaries.
Planning for Your Own Incapacity
If you fund a trust while you are still alive and establish a successor trustee to take over in the event of your incapacity, you can use the trust to manage your medical bills and assets while you are incapable of doing so. You’ll save your family the trouble of needing to go to court to appoint a conservator to oversee your estate.
Protect Your Assets From Bad Decisions by Your Surviving Spouse
When you pass away, if you do not have a will, trusts, and other estate planning documents in place, all community property and a large portion of your separate property will go directly to your spouse. If your spouse turns around and disinherits your children or spends all of your money in a wasteful fashion, your kids could ultimately get next to nothing of your estate. With a trust, you can ensure that your assets go to your children in accordance with your desires, without concerns about your spouse’s plans or behaviors after your passing.
Call Vancouver Attorney John Lutgens for Help Planning Your Estate in Washington State
For thorough and considered assistance with estate planning in Vancouver, or elsewhere throughout Washington, contact Vancouver asset protection lawyer John Lutgens for a no-cost consultation at 360-693-2119.