Creating a last will or estate plan is one way to help solidify your final legacy after you're gone. You take the time to carefully assign your assets and possessions to loved ones, family members and even charities you support. The idea is to provide something of value to your loved ones, not to create an additional burden for them when you're gone.
The sooner you start planning, the better protected your family will be and the more developed your estate plan can become. For many people, trusts eventually become a critical part of an estate plan, especially if they have substantial assets.
Trusts provide shelter from certain inheritance taxes
For some families with substantial assets, an inheritance can complicate their financial situation. There are often substantial taxes required on estates or inheritances over a certain value. One of the simplest ways to reduce this burden and lower tax liability on your estate is to create and properly fund a trust.
This approach is also a good idea if you have family members who depend on social supports. Instead of increasing their income dramatically and disqualifying them from Medicare or other programs, you can provide a steady, moderate stream of support that increases their quality of life and security.
Trusts protect your wishes well after you're gone
Depending on the kind of trust you create, there are many functions it can serve in your estate. You may decide to create a trust to hold your family's land and houses, for example. Your last will could include special leases that last until your direct family members pass on, at which time the trust could donate the properties to a charity.
Alternatively, a trust can carefully outline how and why heirs and beneficiaries can access the assets of the trust. This is a great tool for those who have financially irresponsible children or perhaps a loved one with special needs. A trust can help ensure there is a lasting nest egg for your loved ones to rely on without risking it getting used up on frivolous spending.
Trusts can provide for the care of pets and properties
Do you like the idea of having families in your home, but hate the idea of it being torn down and sold for redevelopment? Placing your home in a trust can prevent that sort of outcome. You can allocate funds for caregivers and put instructions in place to care for the property. That provides your loved ones with a home or an income property, while also protecting your wishes.
If you have pets, horses or other animals dependent on your care, you may worry about what happens to them when you pass on. You can't actually leave assets to non-humans, but that doesn't mean your companion animal will end up euthanized when you die. Your trust could include provisions for caring for these animals. You can even allocate pay for trustees or caregivers who take in your pets when you pass.