Using Trusts in The Right Way

You’ve heard it time and time again: Even if you have a will, you have not necessarily engaged in estate planning and you definitely are not “done” in the sense of making sure you and your loved ones are taken care of if something happens to you and/or your spouse. This is because your will is essentially a roadmap or letter to the probate judge, and probate can be difficult on your loved ones: It’s public, and can be time consuming and expensive. It also doesn’t address the issue of a guardianship, where a judge has to appoint someone to manage your finances because you can no longer do so yourself.

However, using estate planning – and trusts, in particular – in the right way can help address these issues and help you avoid estate tax, as we describe below:

To Avoid a Guardianship

One of the biggest fears we hear from clients is that they will be dependent upon their children as they age. However, guardianships should also be of concern because the process involves a court appointing someone else to manage your assets and making decisions on your behalf; that is, unless you explicitly plan to avoid this through a living trust. In addition to losing control over your finances, guardianships should be avoided for other reasons as well; namely, because the guardianship process can be both humiliating and expensive; and involves having to be proven legally incompetent by sitting though a proceeding and having a guardian who is selected and overseen by the court. Living trusts are uniquely positioned to help you avoid guardianships in ways that wills, trusts in wills, and powers of attorney are not. They also provide flexibility and protect heirs from lawsuits.

As IRA Beneficiaries

Using a living trust as a beneficiary for your IRA or 401(k) can also make sense for some, however, in light of the new SECURE Act rules, note that you will want to work with an estate planning attorney to make sure you have required minimum distributions planned out strategically based on who your beneficiaries are.

To Avoid Placing Bank & Brokerage Accounts in Joint Accounts with Children

The right kind of trust also helps leaves funds in your bank and brokerage accounts to your children in the best way possible. One common mistake we see is people, instead, choosing to place these accounts in joint names with their children, which means that they could lose those funds to creditors, in a divorce, in a lawsuit, etc. Living trusts are also more acceptable to asset custodians and banks, who otherwise sometimes need to be sued to recognize powers of attorney for example, which can get expensive and take time.

Contact Our Florida Estate Planning Attorneys to Find Out More

Getting the right estate plan in place is the preventative solution to many of these issues that can arise. The cost of the work will arguably be returned in money saved on probate costs, taxes, and more.

To find out more about estate planning in Florida, contact our Orlando estate planning attorneys at Gierach and Gierach, P.A. today to set up a confidential consultation.

Resource:

forbes.com/sites/jeffcamarda/2020/02/04/estate-plan-secrets–how-to-avoid-estate-tax-part-1-of-2/#6a06a6697957

https://www.gierachlaw.com/using-life-insurance-to-strategically-plan-your-estate-post-divorce/