Advantages of a Trust in Estate Planning

Trusts, both revocable and irrevocable, have many advantages in estate planning, but they also have some downfalls.

Advantages:

1. Trusts make funds and property available almost immediately to family members
2. A revocable or irrevocable trust can pay off your final expenses
3. They can pay off your creditors
4. They can create “sub-trusts” to hold money for specific purposes
5. A trust can delay the distribution of money until children reach a more mature age
6. Trusts help keep your family business private by keeping your estate out of the public process of probate
7. Special kinds of trusts (Irrevocable Life Insurance Trust – ILIT) can keep you under estate tax limits if you carry a lot of insurance

Disadvantages:

1. For Medicaid, if your home is in a revocable trust, or in a irrevocable trust for less than 5 years, the house becomes an asset that Medicaid will count against your $2,000 limit
   • The trustee actually owns title to the home
   • Even if the trustee is you, it is not considered your property, but trust property
2. With an irrevocable trust, you cannot get the property out in case of emergency.  With specially setup trusts(Intentionally Defective Grantor Trust – IDGT), you can swap property in and out, but cannot reduce the monetary value of the trust.

I hope this helped you out.  If you have any questions or want an appointment to discuss this more, contact the DeWitt Law Firm.

from DeWitt Law Firm, PLLC http://ift.tt/1P7nizq


from DeWitt Law Firm, PLLC