Deciding how to leave your money to your heirs is important. Many people assume that it simply involves writing a will stating who gets what assets, and that's the end of it.
Certainly, you can do it this if you want, but you do have many other options. For example, you can put your assets into a trust, which then owns the assets and distributes them for you. Why would you want to do this instead of just using a will?
1. There are potential tax benefits. It may help to make your estate appear smaller by putting money into the trust, reducing the estate's tax burden. This helps your money actually go to your heirs.
2. You can influence the estate for years to come. The trust spells out your wishes — like your heirs using the money to further their educations — after you pass away. You do not have to hope your heirs will do the right thing, as your voice is still heard.
3. You can skip generations. You may want to leave specific assets to grandchildren or even great-grandchildren. A will can also do this, but the trust may give you more control as well as allow you to take full advantage of the tax benefits for trusts.
You have a lot of options. You can create the exact type of trust that fits your needs. For instance, it could be revocable or irrevocable, focus on charities, education or anything else that is important to you. It could keep the assets until your heirs reach a certain age. These are just a few of the options to consider.
If you're thinking of using a trust for your estate, make sure you know exactly which steps to take to carry out your intentions.