Establishing a trust can have various benefits that many individuals find highly desirous. While many people have misconceptions regarding establishment of a trust, a trust can help you manage property and assets, save your family valuable time and money, and ensure that your property and assets are distributed according to your wishes. Below you can find some of the benefits that come along with the establishment of a trust.
Avoiding probate can save both you and your family valuable time, money, and paperwork. If your property and assets are to be distributed solely according to your will, probate is the legal process in which a judge determines the validity of the will. Probate fees can often be high, and the process of probate can exceed one year in length. Establishing a trust allows the bypass of the probate process and allows access to property and assets quickly.
Reducing Estate Taxes
An estate tax is a tax on an individual’s right to transfer property after their death. A trust can provide a way to avoid or reduce estate taxes because assets and property placed into a trust are not subject to these taxes.
Reducing Income Tax (Irrevocable Trust)
An irrevocable trust is taxed as a legally independent entity and in much the same way as an individual taxpayer in terms of income tax rates and available deductions. Contributing income-earning property to an irrevocable trust means that the IRS will treat the resulting income as trust income, not your income. This could put you into a lower tax bracket even if the trust is taxed at the lowest income tax rate.
Charitable Purposes (Charitable Trust)
A grantor can transfer property and assets into a charitable trust and designate that they be given to a specific charitable organization. However, the grantor can continue to use the property. If the assets in the trust are, for example, a summer home or a favorite painting, they can be enjoyed just as much after being put in a trust as they were before — and possibly more, because the grantor knows that the property will ultimately go to support a worthy cause. These kinds of charitable donations are often tax-deductible.
Trusts offer greater privacy than wills because trusts don’t go through probate, so there usually aren’t any public records of them. This means your assets and whom you leave them to are kept private.
Management Of Affairs
Trusts can help you manage your affairs if you become unable to do so. Many people set up trusts to prepare for the possibility that they may become disabled or ill before their death, and thus unable to manage their assets properly.
Taking advantage of these benefits requires a highly skilled attorney. We highly recommend the advice of an attorney when creating a trust. If you have any questions about the process of forming a trust, please feel free to contact Aziz Legal by phone or email at (408) 203-4627 or firstname.lastname@example.org.
This article is merely informational and is not intended to be used as legal advice. Use of any information from this article is for general information only and does not represent personal legal or tax advice, either express or implied. Readers are encouraged to consult Aziz Legal, or another attorney, for any specific legal matters.