Advantages of a Trust in Estate Planning
The advantages of a trust in estate planning are many. Trusts, both revocable and irrevocable, have many advantages in estate planning, but they also have some downfalls.
Here are the Advantages of a Trust:
- Trusts make funds and property available almost immediately to family members
- A revocable or irrevocable trust may pay off your final expenses but doesn’t have to pay off your final expenses. This can save the estate $10,000’s
- They may pay off your creditors, but don’t have to.
- They can create “sub-trusts” to hold money for specific purposes
- A trust can delay the distribution of money until children reach a more mature age
- They can protect the inheritance against creditors, financial predators, and addictions
- Trusts help keep your family business private by keeping your estate out of the public process of probate
- Special kinds of trusts (Irrevocable Life Insurance Trust – ILIT) can keep you under estate tax limits if you carry a lot of insurance
Disadvantages of a Trust:
- For Medicaid, if your home is in a revocable trust, or in a irrevocable trust for less than 5 years, the house becomes an asset that Medicaid will count against your $2,000 limit
- The trustee actually owns title to the home
- Even if the trustee is you, it is not considered your property, but trust property
- With an irrevocable trust, you cannot get the property out in case of emergency. With specially setup trusts(Intentionally Defective Grantor Trust – IDGT), you can swap property in and out, but cannot reduce the monetary value of the trust.
I hope this helped you out.