Top 5 Reasons Why Everyone Should Have a Will and Trust in Place
On August 19, 2023 by Walter PowellWhile talking about death can be uncomfortable, failing to do so could cost your family dearly. Without a will, the state determines where your assets go, which can cause disputes and entanglements.
A Trust can also preserve governmental benefits for individuals with disabilities, which a Will cannot. This is a significant benefit.
Prevents Family Disputes
People who know family members who have frequent conflicts understand that the underlying issues are often the reason for a dispute. Family conflict is a reality of life but can also be minimized with healthy communication and careful planning.
If you die without a will, your estate is distributed according to state intestacy laws which create a hierarchy of inheritance among surviving relatives (known as heirs). A choice allows you to include people that intestacy law would exclude and give them specific bequests.
A Trust can also protect the financial future of minor children and grandchildren with distribution terms that you set in advance. This plan also bypasses probate and keeps your family’s affairs private.
Prevents Estate Taxes
Most wills and trusts Ponte Vedra Beach FL allow you to remove assets from your taxable estate. This can be done by transferring the assets into a trust during your lifetime or giving them to beneficiaries before death. You can also include a charity as a beneficiary in a trust to lower your taxable estate and give back to society after your death.
With proper planning, you can avoid paying estate taxes, typically only imposed on the wealthy. Trust is one way to do this since every dollar moved into the trust doesn’t count toward your exemption and isn’t taxed at the 40-percent rate. This is especially beneficial for married couples seeking to minimize estate taxes. However, you should always have a will in place as well.
Prevents Litigation
A lawsuit can be costly in monetary and reputational terms. It also can be distracting and detrimental to productivity.
Litigation is often appropriate in the interests of public safety and consumer protection. For example, civil liability, in the form of lawsuits, can incentivize industries to voluntarily take steps to prevent their products and business practices from causing foreseeable harm to people or property.
However, there are many cases where litigation is simply frivolous. The cost of defending against frivolous claims can be as high as the cost of bringing a case to trial. In addition, litigation can tarnish the company’s reputation and hurt employee morale. To avoid these costs, companies can minimize the risk of litigation by clearly communicating with all parties from inception through the course of a dispute.
Preserves Assets
A Trust helps you preserve your assets and provides creditor protection for the inheritance you leave to your beneficiaries. A Will does not offer this level of security, so your beneficiary’s creditors can go after the money they receive.
A trust also allows you to pass on life insurance proceeds without incurring estate taxes, a key feature for those with special needs children. A revocable special needs trust can help ensure that the funds passed to your disabled child are not used up and that they remain eligible for essential government benefits like Medicaid.
Lastly, a trust can avoid the lengthy and expensive probate process, saving your family time and money. However, if you are not careful with the titling of assets, your estate may still have to go through probate.
Preserves Freedom
A last will is a legal document that details your assets and how you would like them distributed upon death. It names a beneficiary or beneficiaries to receive your estate and trustees to oversee distributions. It also outlines the power of attorney, end-of-life healthcare decisions and guardians for minor children.
On the other hand, a trust allows you to retain ownership of your assets during life and bypasses probate at death. It can be arranged to accomplish many goals, such as reducing estate taxes, protecting family members with addiction issues or preserving assets for minors until they are adults. It can even safeguard heirs from predators and creditors. Trusts can be revocable or irrevocable. An experienced estate planning lawyer can help you determine which is best for your situation.
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