Have you been considering working on your estate plan? Do you have assets that you need to protect from creditors? To create an estate plan is important in everyone’s life. If you plan to establish a trust, you may already be thinking about a lot of the different benefits. On one hand, you can completely control what goes into the trust, you can avoid probate for your families and your finances and assets will be in good hands if anything happens to you. Now, if you want to avoid taxes, there are ways that you can do that too. Here are the trusts that can help you lessen your tax burden and protect your assets.
Asset Protection Trust
Asset protection trusts provide you with a means to protect your assets from any creditors. You would transfer your assets ownership to a trustee. These are irrevocable trusts and since you do not own the trust, your creditors cannot touch what is inside. With an asset protection trust, you may receive income tax savings. It is important that you discuss the ins and outs of an asset protection trust with your lawyer. This is the best way to know whether it will accomplish tax savings while protecting your estate from creditors and others that may stake claim to your assets.
Bypass trusts do help you avoid any estate tax liabilities. This is a trust for married couples where each spouse sets up their own trust up to the maximum allowed to have an estate tax exclusion and then leaves the rest to their spouse. This way, if one dies, he or she receives all of the property without taxes attached.
If the assets increase in value while in the trust, they are still not subject to any tax increase. When both pass, then the contents in the trust can go to different beneficiaries. These beneficiaries do not have to face estate taxes either.
There are a lot of different types of trusts that people choose when it comes to estate planning. What you choose is heavily dependent on your situation. You have to take into consideration the size of your estate, your status as a married person or single and who you want to leave your assets to. If you want to avoid taxes, then you should talk with an estate planning lawyer in Allentown, PA for more information. Set up your consultation with a lawyer as soon as possible.
Thanks to Klenk Law for their insight into estate planning and tax benefits of trusts.