Using a trust as part of your estate plan offers many advantages. Like a Will, a trust allows you to specify who will receive your assets upon your death. But, a trust provides additional flexibility, privacy, and tax benefits and can be used to avoid probate.
To take full advantage of the benefits of a trust, you should work with an experienced estate planning lawyer. Preparing a trust can be complicated, and there are pitfalls for the unwary. When you work with the Vander Laan Law Firm, LLC, Nevada estate planning attorney Natalia Vander Laan will ensure your trust is structured correctly, complies with all legal requirements, and is tailored to your unique situation. Natalia Vander Laan can help you determine which type of trust best meets your goals and avoid mistakes that could compromise the effectiveness of your trust.
With offices conveniently located in Carson City and Minden, Nevada, the Vander Laan Law Firm provides estate planning services to people throughout the Carson Valley. She will analyze your situation, learn about your estate planning objectives, and prepare a comprehensive estate plan to help you achieve your goals.
Trust Basics
A trust is an estate planning tool that provides for the administration of your assets during your lifetime and their distribution after your death. To be effective, you must transfer assets into the trust during your lifetime or use a pour-over will to transfer assets into the trust at the time of your death.
A trust is a separate legal entity. However, by naming yourself as trustee and transferring assets into the trust, you retain control over assets placed in the trust.
Many trusts are revocable, which means you can change the terms of the trust at any time and as many times as you wish during your lifetime. When you create a trust, you should name a successor trustee who will administer the trust after your death or if you become incapacitated.
Some situations require an irrevocable trust, where the trust creator gives up control and ownership over the assets once they are placed in the trust.
Nevada Will vs. Trust
A Will and a trust are both estate planning tools that can be used to transfer wealth to other people. However, there are important differences between them
- Effective Date. A Will only takes effect upon your death, whereas a trust can take effect as soon as it is created or, in cases of a testamentary trust, at the time of your death.
- Probate. A Will must pass through probate, which is a court-supervised procedure for ensuring the Will is valid, paying debts, and distributing assets. Probate can be costly and time-consuming. A trust avoids probate and allows for faster distribution of assets without court oversight.
- Privacy. Because probate is a public proceeding, your Will becomes public record and anyone can view it. A trust is a private document and does not pass through probate. The contents of the trust and who trust assets are distributed to remain private.
- Effect During Incapacity. Because a Will has no effect during your lifetime and only comes into effect upon your death, it does not include provisions for managing your assets in times of incapacity. A trust allows you to appoint a successor trustee who will manage your affairs if you become incapacitated without the need for a court-appointed guardian.
- Tax Benefits. A Will does not provide any direct tax benefits. It is simply a set of instructions that describes how your assets will be distributed upon your death. A trust can be used to remove assets from your estate, thereby reducing your taxable assets.
- Complexity. A Will is generally simpler and easier to create, whereas a trust is more complicated and may require ongoing management.
- Cost. A Will is usually less expensive to prepare; however, the cost of probate can quickly add up. A trust is more complicated and expensive to set up, but can save money in the long run by avoiding probate and reducing estate taxes.
- Asset Distribution. A Will provides a set of instructions for asset distribution upon your death. The beneficiaries receive the assets as specified, with little flexibility for managing assets and changing circumstances over time. A trust offers greater flexibility and control and can allow for asset distribution based on a specific set of conditions, such as age and time, or scheduled distributions over time.
Benefits of a Trust
Using a trust as part of your estate plan offers several important estate planning benefits
- Retain Control of Your Assets. When you create a living, revocable trust, you remain in control of your assets. You will name yourself as the trustee and can move assets in and out of the trust as you please. You can also appoint a “successor trustee” who will serve as the trust representative upon your death or if you become incapacitated.
- Avoid Probate. Avoiding probate is a significant benefit of creating a trust. Probate is a court-supervised process that ensures your Will is valid and your assets are distributed correctly. All assets that were owned by the deceased person and do not pass by operation of a law or beneficiary designation must pass through probate. Probate can be expensive and time-consuming. A trust allows you to avoid the cost and delay of probate and transfer your assets upon your death or at a time or upon the occurrence of a specific event, as you see fit.
- Privacy. When a person dies, their Will becomes a public document and is open for anyone to see and, in some cases, contest. Because probate proceedings are public, anyone can learn the details of your estate. By contrast, a trust is a private document and does not become part of the public record. Unless a person is named as a trustee or beneficiary, they will be unable to identify assets that were placed in a trust or determine how they were distributed. And in most cases, a trust is harder to challenge.
- Security. A properly drafted and funded trust provides additional security because it creates a clear and private plan for the distribution of your assets.
- Reduced Tax Liability. A trust can be a valuable tool to help you minimize estate taxes while transferring wealth to beneficiaries.
- Planning for Incapacity. Your trust can include provisions for how your assets will be managed if you become incapacitated and are unable to manage your own finances. This ensures your affairs are handled smoothly and according to your wishes, without the need for probate court intervention.
- Planning for Unique Circumstances. You can use a trust to address unique family needs, such as transferring wealth to a family member with special needs without jeopardizing their eligibility for government benefits like Medicaid or Supplemental Security Income (SSI).
Do I Need a Trust?
Deciding whether you need a trust depends on your unique circumstances, goals, and financial situation. Estate planning attorney Natalia Vander Laan can analyze your situation and provide advice and guidance to help you decide whether your estate plan will benefit from a trust. She can prepare a customized estate plan that will evolve to accommodate your changing life circumstances.
Contact the Vander Laan Law Firm Today
For help deciding whether a trust is right for you and to begin preparing your customized estate plan, call 775-461-2897 or contact the Vander Laan Law Firm today.