It has been said that there are two certainties in life — death and taxes. While this phrase may sound trivial, it does apply to the concepts of trust planning. Many Nevada residents are finding that trust planning as a part of their estate plan can make things easier for their family later on and can lessen the financial burden of estate taxes.
One type of trust to be considered is the testamentary trust. This type of trust takes effect on the death of the individual, and traditional estate taxes do apply. A testamentary trust may be the answer if the individual is planning to utilize assets that will be in the trust prior to his or her death. The terms of a testamentary trust may be changed at any time prior to the death of the individual.
Another type of trust is the living trust. A living trust transfers assets to the beneficiary immediately. Since the individual who originally owned the assets is still alive, estate taxes do not apply. However, other taxes may apply, depending upon the circumstances.
There are many reasons why one may consider establishing a trust as a part of their estate plan. If assets are being transferred to a spouse who is unable to make sound financial decisions, an appointed trustee can make these decisions as a part of the trust. Additionally, if assets are being transferred to minor children, they are not legally able to make financial decisions. Therefore, the trustee can accomplish this for them until they are of age to receive the assets from the trust.
While death and taxes are generally not subjects many Nevada residents want to spend time contemplating, they should be considered when developing an estate plan. Trust planning as a part of the estate plan can potentially ease the burden on a family. By thinking ahead, the individual can ensure that his or her family is taken care of even after one’s death.
Source: theglobeandmail.com, How to use a trust when estate planning, No author, Feb. 20, 2014