It is a common misconception that trusts are only useful or usable by the ultra-wealthy; the truth is that a trust is a viable tool for anyone with a net worth of $100,000 or greater, according to the executive director of the National Association of Financial Estate Planning, Mike Janko.
If your net worth is equal to or more than $100,000 and you meet at least one of the following criteria, utilizing a trust could benefit you greatly:
- You have a significant amount of your assets in business, art collection or real estate;
- You want to leave a substantial amount of your assets to your grandchildren tax-free;
- You wish to leave your estate to your heirs, but under certain conditions, such as that they must receive the inheritance in different segments over time, or that they must finish college first;
- You want to support your spouse financially, but the bulk of your estate is meant to pass on to your heirs;
- You want to maximize your potential estate-tax exemptions; and
- You want to provide for a disabled relative without disqualifying him or her from government assistance programs like Medicaid.
Because there are different types of trusts, the benefits can vary depending on the circumstances of your estate, so you should speak with a lawyer before deciding the actions you want to take.
Creating trusts for children to receive their inheritance can be a useful and savvy tool for anyone who would like to provide better protections to his or her assets for the welfare of heirs and surviving spouses.
If you want to protect assets by the power of the trust, then those assets must be retitled in the trust’s name, which means that you technically no longer own those assets, although you may benefit from them while you are still alive. If something is not inside the trust, however, it may go through probate court, which is not only public and time-consuming, but also sometimes counterproductive. Your assets may not go to the heir of your choosing, but instead to one the probate court chooses for you.
Some of the other benefits of creating trusts to manage a child’s inheritance include:
- the ability to place conditions on your assets and how they are distributed;
- minimizing your assets' exposure to estate and gift taxes;
- the distribution of assets to your heirs without incurring the delay or cost of probate court, which can cost 5% to 7% of your total estate;
- more security against lawsuits and creditors; and
- the ability to name a successor trustee who will manage your trust if you become unable to or if you pass away.
Trusts are governed by complex regulations that provide them with a great deal of flexibility if they are leveraged correctly. There is a wide variety of different types of trusts, and before you select one, you should speak with an estate-planning and trust attorney who can advise you on the advantages and disadvantages of each type of trust.
Estate Planning Assistance from a Pennsylvania Trust Attorney
Deciding how you will leave your legacy and your estate to your heirs is an important decision, and you should ensure that all the pros and cons of each option available to you have been examined thoroughly.
Whether you want a credit shelter for your assets or you are in a unique position; for example, your estate is predominantly invested in artwork, our Pennsylvania trust attorney team can help you make the best choice for your needs. Call our offices today to schedule a consultation with an estate planner today – 1-610-933-8069.