In the state of Indiana, for those who have modest estates and wish to distribute all of their assets at the time of their death, a Will may be sufficient for estate planning purposes. For those who have more complex estates, such as business assets, real estate with significant equity, and intellectual property assets, or assets worth more than $1 million, a trust may be desirable. Additionally, some form of a trust may be desirable for parents who wish to plan for the support of their minor children upon the death of the parents.
Trusts & Tax Planning.
One of the most common reasons to utilize a trust is to avoid or at least minimize Federal estate tax liability. Due to relatively recent temporary increases to the Federal estate and lifetime gift tax exemption, Federal estate tax issues are less commonly encountered. For example, the Federal estate and lifetime gift tax exemption will be $12.92 million per individual for 2023. However, unless Congress takes action to make the current level of exemptions permanent, in 2026 the exemption will revert to its pre-2018 level of $5 million dollars, as adjusted for inflation. In the event that occurs, more estates will need to take the necessary steps to plan on ways to eliminate or at least minimize estate tax liability.
The Right Trust For Your Family's Future.
There are several different trust options available to meet your needs. At Huelat & Mack P.C., we can listen to your concerns and advise you as to your best options regarding what type of trust (e.g., a living trust or a testamentary trust) will best serve your needs and goals.
Advantages Of Living Trusts.
You can create a revocable living trust that permits you to keep control of your assets during your lifetime while, at the same time, providing for the swift distribution of assets to your beneficiaries upon your death. A major advantage of using a revocable living trust is the ability to revise or revoke the trust depending on how your finances, assets, and relationships evolve.
Some advantages of a properly drafted revocable living trust include:
- Asset protection for your spouse after your death;
- Asset protection for your children after your death;
- Protection of assets from claims of a subsequent spouse after your death;
- Disability planning in case you become mentally incapacitated; or
- Special needs planning for disabled beneficiaries
Different Types of Trusts.
While a revocable living trust has many advantages, it does not protect your assets from nursing homes, divorce, bankruptcy, lawsuits or other creditors during your lifetime.
- Irrevocable Trust: A trust that typically cannot be amended after its creation. However, you may enjoy maximum tax benefits with an irrevocable living trust because the assets included may be sheltered from Federal estate taxes.
- Testamentary Trusts: A trust that is created and defined by the terms of your Last Will and Testament.
- Special Needs Trusts: This type of trust can be created as a living or testamentary trust. It is designed to make funds available to a named beneficiary (such as a child or dependent adult with special needs), while at the same time preserving the beneficiary’s eligibility to receive government benefits (such as paying the cost of long term care in a skilled nursing facility). The purpose of the trust is to provide funds to supplement the needs of the beneficiary beyond what is being provided through the government benefits.
Contact Huelat & Mack P.C. today and we can help you decide which type of trust is best for you and your family’s future.