To know whether a trust is for you, you must first have clear estate planning goals.
I do not know your specific situation so I cannot tell you whether or not you need a trust.
But I can explain a few ways a trust can be helpful.
The first reason people create trusts is to avoid estate tax consequences.
As a result of the American Taxpayer Relief Act, this reason currently affects just 0.2% (roughly 600,000 individuals) of the U.S. population, according a recent CNBC article, titled “What's the difference between an inheritance and a trust?”
The $5 million exemption and the portability rules regarding exemptions for married couples were made permanent.
Adjusted for inflation, the exemption is $5.45 million for an individual and $10.9 million for a married couple.
The unfortunate news for people above this threshold?
The tax rate on their estates was bumped up to 40%.
If this is you, you would absolutely want to create a trust.
If your concern is with income and capital gains taxes rather than estate taxes, a trust would not benefit you in these areas.
What other reasons might you want a trust?
- Trust are great tools for transferring assets to charity.
- Trusts can be great for managing assets while you are alive and after you have passed.
- Trusts provide greater control in how and when heirs receive finances from your estate.
This was merely a quick overview of how one might utilize a trust in estate planning.
If you have more questions about your specific situation, explain your goals and you needs to an experienced estate planning attorney. He or she will then be able to draft the best documents for you and your family.
So, how do you find an "experienced" estate planning attorney?
First, ask around. Friends, family and other professional advisors are trustworthy sources.
Second, conduct an "organic" search on "Google" for "estate planning" near you (e.g., "Estate Planning Anytown MoKan").
Third, either way, verify! Check out the education, experience, ratings and client reviews of any attorney before you contact him or her.
In fact, I use both of these services to thoroughly vett attorneys before referring members of our "client" family for legal help in other areas of law or for matters in jurisdictions outside Kansas or Missouri.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: CNBC (July 6, 2016) “What's the difference between an inheritance and a trust?”