There are numerous advantages to creating a trust. The biggest advantage is that you can save your loved ones the time and hassle associated with going through probate court. If your estate is subject to estate tax, having certain types of trusts can help lighten your liability – if not diminish it completely. There are some cases where trusts have more advantages then others, but it all depends on your family and financial situation.
One advantage of a trust is that your family and your estate won’t go through probate court. Probate court can be time-consuming and costly. When you use a trust, property skips probate because it is assigned in the trust. If you have any beneficiaries inheriting property, they will inherit it through the trust.
When you create an estate plan, you don’t have the benefit of asset management. You may have an executor, but that is the extent of your asset management. When you create a trust, you select a trustee who will manage the assets in the trust. You can even limit how much he or she can do with your assets.
Certain types of trusts can provide estate tax efficiency. If your estate is subject to the estate tax you may want to consider setting up a trust such as a qualified personal residence trust, a dynasty trust, or an intentionally defective trust. Your estate planning attorney can help you determine if you’ll owe estate tax and whether or not your plan will help you avoid it.
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