A trust can help people of all ages in a variety of situations. For example, trusts can protect assets from creditors and other claimants that may arise after the grantor’s death. They can also keep assets safe from family members who may use or waste them, even with the best of intentions. Trusts can also reduce Ohio and federal estate taxes, appraisal fees, attorney’s fees and/or probate costs in some circumstances. They can also preserve the generation-skipping transfer tax exemption.
A revocable trust allows you to change beneficiaries and tweak the terms while you are still alive. This makes a revocable trust highly flexible to match your changing lifestyle and family dynamics.
An irrevocable trust can be more beneficial if your primary goal is to reduce the amount subject to federal and state estate taxes by effectively removing the trust assets from your estate. Irrevocable trusts can also provide protection for beneficiaries from creditor claims and a way to reduce state income taxes (although distributions from the trust will still have income tax consequences).
For business owners, trust ownership can be used to protect an owner’s rights in their company after they pass away. This can be particularly useful for small businesses that are closely held and/or operated by multiple individuals. In addition, trust ownership of real property and/or illiquid assets can provide tax benefits by allowing them to be sold without paying capital gains taxes.
One common misconception about trusts is that they are only for the wealthy. However, trusts are a tool in the estate planner’s toolbox and can be used by anyone who has concerns about incapacity or wants to ensure their assets will be transferred to beneficiaries according to their wishes.
When creating a trust, it is essential to find the right trustee(s). This person should be responsible and reliable and have the experience and expertise to manage the trust assets. A corporate trustee can offer professional management and objectivity that may be difficult for a beneficiary to obtain from a friend or family member.
It is also important to understand how the trust will work and communicate with the trustee(s) regarding the distribution stipulations. A beneficiary should also review the trust document and fulfill any conditions set forth by the grantor. In order to ensure a smooth transition and avoid costly mistakes, it is recommended to consult with an experienced attorney. This will allow you to discuss your goals and plan accordingly.