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Add a Trust to Your Estate Plan

The first thing that comes to mind when most people think of estate planning is the Last Will and Testament. But there are an estate plan estate planning tools that you should consider, including a trust. A trust is a legal vehicle that allows a third party (the trustee) to hold and manage assets in the trust on behalf of a beneficiary. There are many different types of trusts that you can create for specific purposes.

Below are five of the top reasons why you would choose to add a trust to your Naples estate plan.

1. Trusts Avoid the Probate Process

Trusts are non-probate property. In Florida the probate process is a Florida court-supervised process for identifying and gathering the assets of a deceased person (decedent), paying the decedent’s debts, and distributing the decedent’s assets to his or her beneficiaries. Since the process can be time consuming and court and attorney’s fees can be significant, particularly if the estate is large or complex, most folks try to avoid  probate. In contrast, the trustee of a trust can manage and distribute the property held in the trust immediately after your death with no court involvement.

Furthermore, probate is public. Your will and any personal or financial information associated with its administration will become part of the public record. A trust, on the other hand, remains private and confidential. Only the trustees and beneficiaries will know the details. Because trusts are private, there is a lower risk that they will be contested.

2. Trusts Can Provide Lower Tax Liability

Irrevocable trusts can be used to lower your tax liability. When you create an irrevocable trust, you give up all ownership and control over the property. Once it is made, an irrevocable trust cannot be changed or dissolved. Because you no longer have ownership and control over the trust property, it is not included in your taxable estate. Florida does not have an inheritance tax, but if you live in Naples, your estate may still be subject to federal estate tax. In 2022, the federal estate tax exemption is $12.06 million. The estate tax exemption can change year-to-year, so it is important to work closely with your attorney to ensure that your estate plan is meeting your goals.

Revocable trusts (trusts that can be modified and dissolved) typically do not offer tax benefits.

3. Trusts Can Provide Asset Protection

Certain types of trusts can protect your assets from lawsuits, creditors, and divorce. Asset protection trusts are irrevocable, meaning you have no control or ownership over the trust assets. Because the trust assets are not considered as belonging to you, creditors will not be able to demand payment or transfer the asset.

4. Trusts Give You Control Over the Management and Distribution of Your Property

Trusts can be customized to meet your unique needs. You can include terms such as age attainment provisions or restrictions on how the property must be used. For example, you can state that you want the trust property distributed to your children when they reach the age of 25. As another example, if you have a beneficiary that has shown they are irresponsible when managing money, you can limit how much money the beneficiary receives from the trust every year. In contrast, when a beneficiary receives their inheritance in a will, it is a lump sum. When you discuss your family situation with your attorney, they can talk you through the different possibilities available.

5. Trusts Help During Incapacity

Revocable living trusts can be extremely helpful if you become incapacitated, whether due to a sudden illness, injury, or general cognitive design. In a revocable living trust, you can name a successor trustee to control the trust assets if you become incapacitated. Often the successor trustee is an adult child or other family member. The successor trustee can access the property to pay bills and make distributions on your behalf. You will not have to worry about you and your dependents being financially cared for during your incapacity.

If you are incapacitated and do not have a living trust, your family may have to petition the court for guardianship. The guardianship process can be long, expensive, and stressful to navigate.

How Do I Add a Trust to My Naples Estate Plan?

An experienced Naples estate planning attorney, like James Nici of the Nici Law Firm, can help you add a trust to your estate plan. After your attorney has a complete understanding of your family and financial situation, they will be able to explain the various options available to you. Together you will decide how to best carry out your lifetime and testamentary objectives.

Call A Naples Trust Attorney

If you have questions about adding a trust to your estate plan, you should contact Nici Law Firm. James R. Nici is an experienced Naples attorney with over 25 years of experience. Contact our office today at (239) 449-6150 or use our web form to set up a free consultation.

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