Everyone has an estate. If you own your own home, car, have a 401k or other investments, or even just have a bank account, you have an estate.
Estate planning is the process of organizing your assets in a way that maximizes your financial freedom while you’re alive, and passes those assets to your loved ones when you pass.
Every year, thousands of consumers bypass lawyers and create their own wills, powers of attorney, and other estate planning documents with the help of online tools and books. This breeds mistakes, since when it comes to legal issues, one size never fits all. Without a lawyer, you might not understand the terms. This could have devastating circumstances.
No two people’s situations are the same. An experienced practitioner can ask questions about family circumstances and then draft the will accordingly.
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What is a Trust?
Most people don’t have an estate plan at all. Most people who have a plan have a last will and testament. A will generally consists of a list of assets and who will receive them. For most people, a Trust is a much better solution.
A well-structured trust will:
- Eliminate Probate & Probate Fees
- Minimize taxes on your asssets
- Protect you from long-term spend down
A trust can also allow for more control in how you distribute your assets after you pass. Many people structure their trust to pay their beneficiaries monthly expenses along with a monthly stipend as opposed to a single lump-sum payment.
Types of Trusts
A testamentary trust is set up to be established and operated after the person’s death.
Revocable Living Trust
A revocable trust allows you to retain full control of all your assets in the trust, with complete freedom to change or revoke the terms and conditions of your trust at any time.
Irrevocable Living Trust
An irrevocable trust does not give you full control of any assets held in it and also you are not allowed to make changes without the consent of your beneficiaries. The upside of an irrevocable trust is that it is not subject to estate taxes.