Wherever a trust is used, selecting a trustee is a vital part of estate planning. This person acts as a fiduciary of the estate and is required to engage in settlement of the estate in accordance with the directives provided in the last will and testament.You may want to check out Trustee Services for more.
For every kind of trust a Trustee needs to be established. These include life trusts, testamentary, revocable, and irrevocable life insurance trusts. Each type comprises a Trustee, Trustee, and Beneficiary.
The Trustee is the one who establishes the trust. The Trustee is the official in charge of managing the assets and administering the allocation of inheritance. The Beneficiary is the person identified as receiving property owned by the Trustor in the last Will.
All estate properties not passed to a trust will be subject to the probate process. The exception to the rule is when there is a gift of assets prior to death or the assignment of beneficiaries.
The probate process normally takes four months or more to complete. Complications arise when a person dies or if heirs contest the Will without writing a Will. With trusts, disposition of the estate will take place easily, with properties passed to heirs within 45 to 60 days.
The creation of trusts to safeguard estate assets has many advantages. In addition to reducing probate, inherited land is also excluded from heritage levy. While Trustees are responsible for settling the estate the process is much quicker and less invasive than probate.
Trusts are used mostly when the value of the estate assets exceeds $100,000. Other methods of estate planning can be employed to achieve similar results when the values of the estate are lower. Some of the most common ones include setting up recipients for financial assets and titled property, and giving annual tax-free gifts.
Hiring an estate planning service or lawyer is highly recommended for determining which type of trust offers the best protection.
The situation of all is unique and requires careful planning to minimize the taxes on estate and death.
Living trusts are the most widely used method of estate planning. They offer flexibility, and when required, they let Trustors make changes.
Irrevocable trusts provide much protection and can be arranged to suit the needs of each individual. These can not, however, be changed unless approved by the judge.
Irrevocable life insurance trusts are commonly used when property assets are greater than $2 million. Beneficiaries are entitled to take annual distributions, but the aim is to allow funds to accumulate to cover the inheritance tax expenses.
Testamentary trusts are formed upon the death of an individual. It is generally used when gifting properties to minors. The aim is to transfer or retain financial assets until heirs reach legal age.
The cost of installing trusts runs the gamut from $100 to $2,500 or more. Fees are determined by several factors including the state where property is held; kind of property involved; and the type of trust being established.