Residents of Clark, Nevada, who don't have assets totaling over $5.25 million -- or $10.5 million for a couple -- may not see any benefits in including trusts in estate planning. Federal estate taxes kick in after those amounts, and trusts protect assets from taxes. However, there are other benefits to creating a trust.
Trusts help protect your legacy, even when heirs make poor financial decisions prior to inheriting. If set up properly, a trust can keep children's creditors out of your assets, providing a greater chance that you'll be able to pass your legacy to future generations.
A revocable trust lets you maintain control of wealth even if you're incapacitated. Such legal vehicles ensure someone you trust is in charge of finances, but they also let you set out preexisting conditions for use of funds. Terms may include who receives funds from the trust, when and how those funds are disbursed, and how money is used to care for you in old age.
In many cases, trust assets don't have to go through probate. Not only does that save your heirs expensive probate fees, but it also keeps your legacy from being detailed as part of public record. Some families prefer to keep details about their wealth private, especially if there is a chance of contention or bad blood due to the inheritance.
Federal taxes aren't the only thing that may reduce sizable inheritances. Although Nevada is generally considered a friendly state when it comes to taxes, some states charge large tax percentages on estates. It's important to understand tax law in any area where you have property or income so you can plan to protect your heirs and your own future wealth.
Source: Forbes, "How The Right Trust Could Protect Your Assets And Cut Your Tax Bill" No author given, Apr. 10, 2014