Estate planning

Do You Need Confidence?: An Estate Planning Q&A


The estate planning to-do list is as follows: find a good attorney;  create a list of assets;  determine who will take responsibility;  Learn to use confidence.According to the 2023 Wills and Estate Planning Survey by Caring.comOnly 34 percent of Americans have an estate plan.

The main reasons given by respondents for not participating in estate planning are:

  • procrastination
  • Believing they need more assets
  • Not knowing how to put together an estate plan

An estate plan is a comprehensive set of legal documents and strategies that regulate assets upon a person’s death or disability. Trusts are legal arrangements used in estate planning, along with wills and advance directives.

Trust funds as an estate planning arrangement

A trust allows one person, known as a trustee, to administer the funds and assets of one or more beneficiaries.

A trust can be revocable or irrevocable.

  • Revocable trusts allow the grantor — the person who creates and funds the fund — to change it during its lifetime.
  • With an irrevocable trust, the grantor cannot make modifications. The assets placed in this type of trust are no longer owned by the grantor. Thus, such funds can help someone qualify for government benefits, reduce their taxable holdings, and transfer wealth.

Compared to wills, trusts can be more complex — and therefore more expensive — to set up. The value and usefulness of a trust will depend on your unique circumstances as well as the type of trust you use.

Avoid the commandment

The primary advantage of trusts is that they allow individuals to override wills, which can be time consuming and costly for their surviving loved ones. The court excludes the property deposited in trust from the established real estate.

according to legal zoomProbate costs can eat up to 10 percent of the estate’s value. The process can also take months to years to complete, placing a heavy burden on family members.

Transferring assets out of will through a trust also preserves privacy. The will’s records can be accessed by the public. The contents of a will may become publicly available as bequests pass through probate. But trust funds, which are kept outside of probate, are kept confidential.

Other benefits of trust funds

In addition to avoiding probate, trusts can enjoy tax benefits. By creating an irrevocable trust, individuals can reduce the value of their taxable estate while transferring the property to their loved ones.

When you use a trust, you can have more control over the assets than if you gave them directly to the recipient.

  • Those who wish to reward their loved ones for certain events in their life, such as obtaining a university degree, can place such conditions in their trust.
  • Donors with young children can set up a trust so that the child receives the money only when they reach a certain age.
  • If a child’s marriage ends in divorce, the trust may protect the assets as separate property.

Benefits eligibility

Seniors and people with disabilities can also use a type of irrevocable trust known as a Medicaid Asset Protection Fund (MAPT) to qualify for Medicaid.

Individuals who intend to use Medicaid to pay for long-term care may put into MAPT certain assets that could result in their ineligibility for Medicaid. Once the Medicaid review period has passed, they can qualify for benefits. Since MAPT is irrevocable, the grantor no longer controls and owns the assets. And since they can designate beneficiaries, they can transfer and benefit from their wealth without first exhausting their assets to join Medicaid.

If you intend to rely on Medicaid in your retirement, consider speaking with an estate planning attorney to learn more about whether a Medicaid Asset Protection Fund could benefit you.

Funds for people with special needs

One type of trust that can be an invaluable estate planning tool for seniors with disabilities is a Special Needs Trust (SNT). This type of trust can maintain the beneficiary’s eligibility for Supplemental Security Income and Medicaid while providing for needs not covered by public benefits. The trustee can use the SNT to pay for things like caregiving, outings, and entertainment.

Consult with a lawyer

Although not everyone needs to set up a trust as part of a solid estate plan, trusts can benefit many people in the transfer of wealth. Talk to a qualified person Estate planning attorney Learn more about the optimal estate planning strategy for you.

Creation date: 05/31/2023

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