Are you worried about the future of your loved ones, as well as your assets such as your farm, ranch, truck or business? If so, you’re not alone. In fact, a number of people are concerned about these same matters, and if they’re not, then they should be.
Those who fail to implement legal protections through effective estate planning may have their assets passed on to people they never intended to be heirs. This can leave loved ones cut out, sometimes wondering why they were overlooked. In addition to hurt feelings, it could leave the legacy you’ve built with your farm or your business at risk if it were to fall into the wrong hands. You don’t want your estate or your loved ones to be in that position.
So, what can you do? A number of things. A basic will is a good start, but one or more trusts may also be beneficial, depending on your needs. Here is a quick look at some of those trust options:
Revocable trust
This type of trust allows you to place assets within it and remove them whenever you want. You then choose a person who will receive the assets upon your death in accordance with the trust’s terms. This person is called the beneficiary
One drawback of this kind of trust, though, is that, unlike other trusts, it does not protect assets from creditors. It does allow assets within the trust to bypass the private process, however, and it allows for the greatest amount of flexibility so that your estate plan isn’t derailed by a major life event like a divorce.
Irrevocable trust
Unlike the revocable trust, assets placed in an irrevocable trust cannot be removed. So why use it? There are two major reasons:
First, it could protect your assets from creditors, meaning there’s a better guarantee that the assets will be inherited by your named beneficiaries.
Second, assets that are placed in an irrevocable trust are excluded from the estate when calculating estate taxes. This may be important, especially if your estate includes a valuable farm or business.
Spendthrift trust
This type of trust may be right for you if you are worried about how a beneficiary will handle his or her inheritance. Oftentimes, the terms of these trusts prevent a beneficiary from accessing the principal in the trust, at least for a specified period of time. This allows for a greater period of time and provides a beneficiary with more long-term stability.
Properly Setting Up A Trust
These are just a few of the many types of trusts that may prove beneficial for your estate and your family. But you need to set up these legal entities in a way that is enforceable. So, if you don’t want to address these matters on your own, and most people struggle to do so, then you might want to think about discussing them with an attorney who is reliable, trustworthy and knowledgeable on the subject.
