Image of living trust and estate planning document. A tax form is also included in the scene.

Estate Planning can be a tough discussion, but having a trust and will in place when the time comes can help answer the important questions for your loved ones. Your estate plan will outline your wishes for the transfer of your assets when you die.  The written legal document detailing your wishes is usually a will but can also include a trust.

Here are a few reasons why you may consider using the trust:

Avoid Probate

Probate is defined as the process of organizing and transferring your assets after death, as specified in your will.  It can be a public process, as wills are generally filed at the local court house.  In contrast, a trust is a private document that allows you to lay out your wishes for your assets without public disclosure.

Also, State law generally dictates the amount of legal fees allowed in probate.  A trust will not be free from fees, but it may be significantly less than the full attorney fees allowed in probate.

Rule From the Grave

Transferring your assets to heirs may be a scary thought, especially if there are fears that the assets won’t be handled appropriately.  Through a trust you can dictate the level of control your heirs have over those assets.  For instance, if you want your heir to receive income from the farm, but without selling the land, this stipulation can be included in the trust document.

Provide a Legacy For Your Favorite Charity

A trust that is activated at your death and funded with a lump sum of your estate assets can payout its income annually to benefit a charity.  It can be titled with your name and become a valuable income stream for the charity.

Get a Charitable Tax Deduction Before You Die

Some trusts, called split interest trusts, can qualify for a charitable deduction up front.  Common types are:

  • Charitable Remainder Trust – will provide you an income stream up front and pay the remainder of the assets out to the charity after a period of time or after your death.
  • Charitable Lead Trusts – distributes payments for charitable purposes first and the remaining interest can be paid to your heir.

Provide For a Disabled Relative

Setting aside some assets for a disabled relative is a great reason to establish a trust.  The trust can include your directions for meeting the needs of the relative and can be designed to not interfere with other assistance the disabled relative may qualify for.

Trusts are a powerful tool for those who choose to outline their wishes upon the transfer of their assets. The estate planning professionals are here to help you weigh your options and ensure the proper planning has taken place, give TDT CPAs a call to set up your estate planning appointment today.

Darcee Ayers is a Tax Manager with 28 years of experience in the public accounting profession.  Darcee specializes in exempt organization tax issues as-well-as trust and corporate taxation.  She is currently a member of the Iowa Society of CPAs and the American Institute of Certified Public Accountants.