Practical advice for utilizing the benefits of trusts

As we’ve discussed in several recent posts, there can be numerous advantages to setting up a trust.

For example, readers of this blog know that a carefully developed estate plan that includes trusts may help minimize or avoid probate and its related costs, minimize estate tax and ensure that beneficiaries receive the property they were intended.

This follow-up discussion to earlier posts explores some of the practical problems that may be encountered when setting up a trust. First and foremost, a trust must be properly funded. If assets aren’t transferred to it, then all of the advantages discussed above won’t be realized. If provisions in a will don’t account for subsequently acquired property, an estate may have to go through probate in order to transfer that additional property into the trust.

Of course, an attorney that focuses on estate planning knows that there are specific procedures required, depending on the type of asset. For real property, the deed is required to transfer the property into the trust, at which point the trust becomes the legal owner of the property. For retirement accounts, care must be taken to ensure that the beneficiaries are properly named.

In addition, an attorney can help an individual clarify the goals that he or she might want to accomplish through careful estate planning. For individuals who are not yet ready to relinquish control of assets but still want to ensure a process is in place, a revocable trust might be a good starting point. Although retaining control won’t provide tax benefits, it does become irrevocable upon the individual’s death or incapacity.


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