Some people in Florida believe that they only need a last will and testament for their estate plan. While a last will and testament can be beneficial, creating a trust might help some people accomplish other important estate planning purposes. Unlike wills, trusts do not go through the probate process. This helps families to benefit from a faster distribution of assets while shielding their privacy. Some other important reasons to establish trusts are briefly discussed below.
Estate planning for families
Minor children cannot directly inherit assets. Instead, children who are left assets in a will, a life insurance policy, or a retirement or investment account will have the court appoint a conservator to hold the money for them until they reach the age of majority. When the children turn 18, they will then receive their inheritances in a lump sum. Many 18-year-olds are simply not mature enough to handle a sudden windfall. With a trust, a grantor can name minor children as beneficiaries. However, the grantor can include provisions for when the assets will be distributed. For example, a trust might include a provision that the trustee will only distribute the trust assets to the minor children when they reach age 25 or accomplish another milestone such as graduating from college.
While the federal estate tax exemption is currently set at $11.7 million per person or $23.4 million for a married couple, there is no guarantee that it will remain at this level. People who have amassed substantial assets may help to shield some of what their loved ones will receive from estate taxes in the future by locking in the current exemption. Trusts might also be used to reduce the potential tax consequences that might otherwise occur.
Trusts can be created to accomplish many different purposes. They might be useful for providing for special needs children, protecting spendthrift adults, and protecting assets from creditors. An estate planning attorney might help clients determine whether their goals might be best accomplished with a trust.