If you have spent a significant number of years building a business or accumulating substantial assets in Cape Coral, you may be wondering how best to preserve your hard work for your heirs. While a will can contain certain details about your wishes for how you want your wealth distributed when you pass, it is only the most basic tool in a complete estate plan. To protect your property for future generations, you may want to consider creating a trust.
In general, a trust is a legal entity that includes a specific set of instructions regarding how and when your property will pass to your named beneficiaries. For example, if you have a son or daughter that is not very skilled in money management, you may want to set up a trust that portions out the assets over time instead of in one lump sum. Here are some other common benefits of creating a trust.
Control the distribution of retirement assets
If you name an individual as the beneficiary to your retirement account, that person could liquidate the account after your death and incur a rather large tax bill in the process. To mitigate the tax consequences, you can create a trust and list it as the beneficiary of your retirement assets. You can also include stipulations that the trustee can only withdraw and distribute to the beneficiaries limited amounts that meet the account's minimum distribution requirement.
Keep it in the family
A trust will also help you keep your wealth in the family. For example, if at the time of your passing you are on your second marriage, your surviving spouse could end up with the lion's share of the assets you accumulated for your children. Then, those assets could pass to their children instead of yours at the time of their passing. A qualified terminable interest property (QTIP) trust is a valuable tool to provide both for a surviving spouse and ensure that any remaining assets revert to your heirs at the time of your spouse's death.
Make the transition easier
If probate is a concern, a trust is a powerful tool to ensure your beneficiaries receive their inheritance in a timely and efficient manner. While a will allows you to transfer your assets to your heirs, it might still have to go through the probate process. Probate can take weeks, months and sometimes years depending on the extent of your wealth.
Your children's inheritance could be out of their reach for some time. In addition, probate can be costly and eat away at the money and property you intended to pass to your heirs. Probate is also a public process which means that anyone can look closely at the property you accumulated. You can avoid this by placing your property in a trust so that is passes quickly and discreetly to your beneficiaries.
If you are considering various options for your estate plan, it is important to keep in mind the various benefits of a trust. With a little planning, you can include a powerful estate planning tool to protect your wealth for future generations.