For most people, one of the primary goals of an estate plan is to provide a roadmap for the distribution of estate property to beneficiaries after death. Assets can be gifted outright to beneficiaries or they can be held in a trust for beneficiaries. If you are creating an estate plan for the first time, or planning to update an existing plan you may be contemplating which option is better for your plan. As such, you may be wondering “ What are the advantages to keeping assets in a trust for my beneficiaries instead of gifting them outright? ”
Trusts have evolved to the point where there is a specialized trust for almost any estate planning goal or objective; however, at their core all trust agreement are essentially the same. A trust allows you to transfer assets into the trust where they will be managed, invested, and distributed according to your terms to beneficiaries. There are a number of advantages to keeping assets in a trust, including:
- Probate avoidance – one of the most common reasons people choose to use a trust agreement instead of gifting assets outright is that assets held in a trust are not required to go through probate. The probate process can take months, even years, to complete. Assets that are part of the probate process are inaccessible to the intended beneficiaries until the end of the probate process which can lead to serious financial problems if your beneficiaries were counting on those assets to survive after your death.
- Control over assets – once an asset is gifted outright you lose control over the asset. With a trust agreement, however, you have the ability to use the trust terms to effectively retain control over how trust assets are used even after you are gone.
- Asset protection – a properly drafted trust agreement can protect assets from creditors of yours and/or a beneficiary, from a spendthrift beneficiary, or even from a spouse.
- Tax benefits – people often take advantage of one of the many specially designed trusts that are intended to decrease your estate’s exposure to gift and estate taxes, capital gains taxes, and/or other state and federal taxes.
If you have additional questions or concerns about trust agreements, or your Illinois estate plan in general, contact the experienced Illinois estate planning attorneys at Nash, Nash, Bean & Ford, LLP by calling 309-944-2188 to schedule your appointment today.
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