INSIGHTS

Benefits of Trusts in Estate Planning

Estate planning is a process designed to protect your loved ones, preserve your wealth, and shape an enduring legacy—and trusts can be an essential component of a complete plan.

A trust is a legal arrangement in which a third party holds and manages assets, such as cash, real estate, stocks, bonds, and businesses, on behalf of your beneficiaries.

Embracing trusts may offer many advantages, including protecting your loved ones from probate and creditors, caring for dependents with special needs, minimizing estate taxes, and more.

Learn about the basics of trusts and the value of incorporating them into your family’s estate plan.

While a will outlines your wishes for the distribution of your assets, trusts allow you to specify precisely how your property assets are managed and transferred to your beneficiaries during your lifetime and after your death.

Three key parties involved in establishing a trust are the grantor, who creates it; the trustee, who manages it; and the beneficiaries, who will eventually receive the assets per the trust agreement.

Also called living trusts, revocable trusts can be altered and canceled while you’re alive, allowing you to add or sell property to provide income for your beneficiaries. Irrevocable trusts are difficult to change or end once funded but can help mitigate the risk of lawsuits and hold lifetime gifts for your heirs.

EverPar can help you understand the types of trusts that best suit your family’s needs, including revocable, irrevocable, generation-skipping, charitable, asset protection, grantor-retained annuity trusts, and more.

Well-designed trusts can provide certain benefits and protections for you and your beneficiaries. Depending on the types of trust you include in your estate plan, these benefits may include the ability to:

Shield Family from Probate, Creditors & Lawsuits
If you pass away with only a will in place, your beneficiaries must go through a legal process called probate to verify the proper transfer of your assets. Not only can probate be costly and time-consuming, but it also becomes a part of the public record.

By placing assets in a revocable trust, you can protect your family from the stress of probate, expedite and simplify the distribution of your assets, and maintain privacy during this challenging time.

If you work in a field that makes you more vulnerable to lawsuits, you may also want to consider setting up an irrevocable trust. Doing so eliminates your ownership of trust assets, which can help shield them from creditors and legal judgments.

Manage Your Assets if You Become Incapacitated
By setting up a living trust, you can help protect and support your loved ones if you become seriously injured, ill, or unable to make financial decisions.

In these scenarios, your trustee can transfer funds to your family, pay medical and other bills, prepare tax returns, and otherwise manage your trust assets on your behalf.

At setup, you can opt to be the initial trustee of the living trust, continue to manage your affairs, and include a provision allowing a successor trustee to take over if you become incapacitated.

Enjoy Potential Tax Advantages
Many people use trusts to help minimize estate taxes. If you set up an irrevocable trust with a third-party trustee, you no longer own your trust assets, which reduces the amount of your taxable estate at your death. Additional potential tax advantages include the ability to:

  • Hold a life insurance policy that can help cover estate taxes and other expenses after you pass, preserving high-value assets.
  • Remove appreciable assets from your estate while providing heirs with a step-up basis in valuing the assets for taxes.
  • Make annual wealth transfers to your trust without paying additional gift tax (if the amount stays within the exclusion threshold). The 2024 gift tax exclusion1 is  $18,000 for individuals or $36,000 for married couples filing jointly.

EverPar can collaborate with your accountants and attorneys on a comprehensive tax strategy that incorporates trusts in your estate plan.

Support Dependents with Special Needs
If your family includes dependents with disabilities or access and functional needs, you can create a special needs trust to provide monetary support without affecting their eligibility for government benefits.

Federal disability benefits such as Medicaid or Supplemental Security Income (SSI) have set income and asset thresholds that, when surpassed, can disqualify people from receiving assistance.

By funding a special needs trust, you can ensure your loved one is well taken care of financially, when you are no longer around.

Have Greater Control Over Your Estate
Trusts can give you greater control over how your estate is distributed and managed. For example, you can include conditions or provisions for how and when your beneficiaries receive or use assets.

This can be helpful if you’re leaving money to a minor child or grandchildren you want them to inherit at a specific age for a particular purpose, such as funding their education. Or, if you’re concerned about a beneficiary’s financial literacy, you can stipulate that they work with a qualified advisor to manage their inheritance.

Revocable trusts also offer the flexibility to alter your trust agreement to align with your family’s changing circumstances—including births, deaths, divorce, and other major life events.

You’ve worked hard to build wealth and enrich your family’s quality of life. Trusts can be an integral part of how you plan for future generations.

EverPar can consider your current financial circumstances, help solidify your family vision, and work with the rest of your team to create a comprehensive estate and trust plan to meet your unique needs.

Let’s talk today about your family’s tomorrow.  

1 irs.gov

EverPar Advisors LLC (“EverPar”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where EverPar and its representatives are properly licensed or exempt from licensure.

All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed.  There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.

The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.