While the new tax law doubles the federal estate tax exemption, meaning the vast majority of estates will not have to pa...Read more
Are Trusts Still Useful If the Estate Tax Is Repealed?
- September 28th, 2017
With Republicans in control of Congress and the presidency, there is talk of eliminating the federal estate tax. In 2017 the tax affects only estates over $5.49 million, meaning that for more than 99 percent of Americans, it's already been repealed. With no estate tax, do you still need a trust? While trusts can be used to shelter assets from the estate tax, trusts have many other valuable estate planning uses.
A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a "trustee," holds legal title to property for another person, called a "beneficiary." The following are some of the benefits of trusts.
- Avoiding Probate. One of the biggest benefits of a trust is avoiding the probate process. Probate is the process of administering and settling an estate after someone dies. It can be a costly and time-consuming process. Even with small estates, beneficiaries may not have access to estate funds until a will is filed and an executor appointed. A trust gives beneficiaries immediate access to trust funds. If you have property in multiple jurisdictions, a trust can be especially beneficial in avoiding more than one probate proceeding. Also, probate is a public process—anyone can access court records--while assets distributed in a trust are private.
- Protection for Disability. Another benefit of a trust is to provide protection if you become disabled. If you become incapacitated, the trustee can manage your finances without the need to go to court and get a conservatorship or guardianship.
- Control. A trust allows you to specifically detail how you want to distribute your assets. For example, you can choose to dole out benefits in small amounts if you don't want your beneficiaries to receive all your assets at one time. You can also direct how funds in the trust can be spent on a beneficiary. If you have property, the trust can specify who has the right to use the property, whether it can be sold, and how proceeds should be distributed.
- Protection from Creditors. Certain types of trusts can be set up to protect beneficiaries from creditors. A properly structured trust can ensure that creditors cannot reach trust funds. This can be helpful if, for example, your intended beneficiary divorces or is the target of a lawsuit.
- Providing for a Child with Special Needs. If you have a child with special needs, a trust is particularly important. A special needs trust allows a beneficiary with special needs to receive inheritances, gifts, lawsuit settlements, or other funds without losing his or eligibility for government programs.
Trusts are just one possible part of an estate plan. To know if a trust is right for you, consult with your attorney. To find an attorney near you, go here: https://www.elderlawanswers.com/elder-law-attorneys. For more on trusts, click here.
Local Elder Law Attorneys in Ashburn, VA
Hale Ball Carlson Baumgartner Murphy PLC
Loretta Morris Williams is a certified elder law attorney by the National Elder Law Foundation. Ms. Williams was admitted to the Council of Advanced Practitioners, National Academy of Elder Law Attorneys (NAELA) in 2012. She serves as President of the Virginia Academy of Elder Law Attorneys. Ms. Willia...
Law Offices of John L. Laster
John Laster is a lawyer licensed to practice in Virginia, Maryland and the District of Columbia. He limits his practice to wealth transfer planning, trusts, wills, powers of attorney, health care decision-making issues, estate administration and related tax, elder law and disability concerns. Listed in The Best Lawyers...
Hale Ball Carlson Baumgartner Murphy PLC
Attorney Samantha Simmons Fredieu is an associate at Hale Ball. Ms. Fredieu graduated magna cum laude from Vermont Law School where she was the symposium editor on the Vermont Law Review, a production editor on the Vermont Journal of Environmental Law, and a member of the Moot Court Advisory Board. She has clerked for...