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Estate planning serves many critical purposes for the estate planner and their loved ones, and to ensure these documents are executed properly, considering assistance from a succession law firm that residents recommend is an essential next step. Estate planning tools are made up of several documents, and each serves a different purpose. While some tools may not be advantageous or applicable to some, others may find them incredibly beneficial, depending upon their situations. Developing an estate plan is a vital aspect of any person’s life because it dictates a person’s wishes when they are no longer able to make decisions on their own. One estate planning tool that many estate planners consider is whether developing a trust is in their best interest.
There are a variety of trusts to choose from, and the process can be complex. However, with our team at Theus Law Offices, it’s possible to make decisions in your best interest in as straightforward a way as possible.
Revocable and Irrevocable Living Trusts
A person can choose from several types of trusts based on their specific needs. A trust is a document where the grantor (the person creating the trust) transfers assets such as property, accounts, annuities, stock certificates, and more into a trust account. When all assets are transferred to the trust, its contents are no longer owned by the grantors but by the trust itself.
A trust is typically managed by a trustee who must follow the terms of the trust for beneficiaries. However, depending upon the type of trust chosen, the grantor, trustee, and beneficiary can all be the same person while they are still living. This allows the grantor to retain control of their assets and property until the time comes when they are no longer able to. Our Shreveport, LA succession law firm can assist clients with choosing from the following most common types of trusts:
- Revocable Living Trusts
- Irrevocable Living Trusts
While there are several other types of trusts to choose from, revocable and irrevocable living trusts are among the most popular types of trusts chosen. A trust can offer several advantages for the grantor and their families.
Grantors cannot only maintain control in some situations but also very specifically detail how they would like assets distributed to beneficiaries. There are several advantages and disadvantages to each of these types of trusts, including:
Revocable Living Trusts: Developed and managed during your lifetime and transferred to beneficiaries upon someone’s death
Advantages
- The ability to make changes over time
- It avoids the probate process
- Protects the inheritance of beneficiaries
- Assets can be available to the successor almost immediately
- Continuity of asset management
- Protects assets when someone becomes incapacitated
Disadvantages
- Trusts can involve extensive paperwork
- Trusts don’t offer tax savings
- May involve ongoing costs
- The trust must be funded, which involves transferring property and deeds
- There may be complications with trustees
Irrevocable Living Trusts: An irrevocable living trust is developed during a person’s lifetime but also takes effect while they are still living. Once these take effect, they cannot be changed.
Advantages
- Potential tax benefits
- Protects assets from creditors
- The ability to access potential government benefits
Disadvantages
- An additional tax returned is required
- Some tax rates may increase
- Challenging to change or modify
Contacting a Lawyer
Developing an estate plan can offer several advantages, and some may not truly realize the full scope of the available benefits until they have the opportunity to meet with a lawyer experienced in this area of practice. Our team at Theus Law Offices stresses the importance of creating an estate plan, it’s important not to wait another moment in developing these crucial documents.