Far too many people think that inheritance planning boils down to the creation of a simple will unless you are very wealthy. In reality, estate planning trusts can play a very significant role when you are preparing for the future, even if you are not a multimillionaire.
Revocable Living Trust
The most commonly used trust is the revocable living trust. With this device, you serve as the trustee while you are living, so you maintain control of the assets. As the name indicates, you can revoke the trust at any time, and you can change the terms as you see fit.
What are the benefits that make a living trust better than a will? First, there is the matter of probate. This is a court-supervised administration process that is time-consuming, expensive, and public.
A will is admitted to probate, and the inheritors have to wait on average between 9-18 months to receive their inheritances. Expenses consume a significant portion of the estate, and interested parties can pry into the final affairs of the testator.
With a living trust, all of these drawbacks are avoided. The successor trustee that you designate administers the trust after your passing. Probate is not a factor. This is one of the benefits, and there are a number of others, including asset protection after you’re gone.
Special Needs Planning
Many people with disabilities rely on Medicaid and Supplemental Security Income. These are need-based programs, so a change in financial status can cause a loss of eligibility.
If you want to leave an inheritance to someone who relies on these benefits, you can use a supplemental needs trust. The trustee would be able to use assets in the trust to make the beneficiary more comfortable, but benefit eligibility would not be impacted.
Incentive Trusts
Let’s say that you are going to be leaving an inheritance to a young relative. You want to guide them toward higher education rather than giving them a cash bequest.
In this situation, you could create and fund an incentive trust. When you’re drawing up the trust declaration, you name a trustee, and you set conditions. Distributions on behalf of the beneficiary will be made as long as the stipulations are satisfied.
For example, you could allow the trustee to pay tuition and expenses as long as the beneficiary is a student in good standing. You could allow a dollar-for-dollar match of money earned after graduation to instill a work ethic.
This is one relatively common scenario, but you can include any incentives that you choose. In addition to positive guidance, you could use the trustee to steer someone away from self-destructive behavior.
Learn More!
Your future is too important to leave to chance. Estate planning is about more than deciding who inherits your assets. It allows you to stay in control, protect the people you care about, and create a legacy that reflects your values.
To make the right decisions, you need clear information and practical guidance.
That’s why we created a free informational guide to help you protect your future and your legacy. Inside, you will learn how essential planning tools work, what mistakes to avoid, and how to build a plan that actually functions when the time comes.
Whether you are starting from scratch or updating an existing plan, this guide gives you the insight to move forward with confidence, and you can gain access here: Charlotte, NC estate planning guide.
If you’d like to schedule a consultation with one of our licensed estate planning attorneys, give us a call at (704) 610-4276 (press option 2)!