When it comes to planning for the future, most estate planning attorneys would agree, your last will and testament is about the most fundamental item that should be on your list. This is because death is one of life’s certainties. It will eventually come for all of us, rich or poor and regardless of our color, religion, or station in life. If we want any control over what happens to the things we’ve worked hard to obtain, then a will is truly a must-have.
But there are also other ways of protecting your assets and providing for those you love. A trust is one of the most flexible and straightforward ways to assert control over your estate long after you are gone. Like many legal instruments, trusts come in a lot of different forms. Here are just four examples of trusts that you may not have even realized exist.
Most people think of trusts as something the wealthy do to avoid taxes. But this has largely changed over the past half century. About 50-75 years ago, wealthy families did use trusts as a means for avoiding things like the estate tax. However, in recent decades, the estate tax has dwindled and been trimmed to the point where very few Americans are affected by it.
For instance, in 2019, there is no estate tax on the first $11.4 million for a single decedent or $22.8 million for a married couple. Only a tiny fraction of Americans reach this level of net worth, so today people are often more concerned about preserving their assets in the event of a nursing home placement or expensive medical bills. Since final medical expenses can reach well into the hundreds of thousands, a lot of families use these specialized planning tools to avoid spending their life savings on medical expenses and nursing home care.
People with disabilities have special needs. There are a few specific instances when a special needs trust may be helpful.
This old concept has now been largely eliminated through other options. It is created by placing money into a financial account during life, with the intention that upon death it will automatically transfer to the other person without passing through probate. Today, most banks offer “payable on death” or “transfer on death” accounts. These accomplish the same basic function.
Whether on their own or as a provision within a larger trust, these allow the trustor (person making the trust) to protect assets from those who would likely squander assets. If there is a person in your family whom you believe has a drug or alcohol problem or compulsive gambling addiction, this type of trust allows you to protect their inheritance even after you are gone by placing restrictions on the money and strict instructions for the trustee to follow when making payments.
Everyone says they will make a will or trust someday, but sadly someday never comes for many. If you become mentally unfit, develop Alzheimer’s disease, or suffer from other major cognitive delays, you could reach a point where you cannot legally make these decisions for yourself. So call the Law Offices of Todd K. Mohink, P.A. today to schedule a one-on-one appointment to review your options with an attorney.
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