Should an inheritance be passed along to future generations with or without a trust? This is a question I often consider when advising clients on their estate plans.
There are several choices families have to make when setting up an estate plan. One is, do I leave a lump sum of money outright to the beneficiaries, or put the funds in trust with instructions for distributions to be made from the trust over time?
Often times, when a beneficiary is young, the money will be left in trust to be managed by a trustee until the child matures. In other cases, money is put in trust to pay bills and expenses for someone who is unable to handle money responsibly.
You may want to consider setting up trusts for beneficiaries who are responsible. The reason to do this is to save estate taxes. The estate tax is applied whenever wealth moves from one generation to the next. However, if the assets are placed in trust for children and their descendants, a generation of estate tax can be avoided.
A Generation Skipping Trust can be designed to give the child beneficiary a lot of access and control over the trust without the funds being included in the child’s estate to be taxed when the child dies. Generation Skipping Trusts are also valuable to keep inheritances in the family so when the child dies, the funds in the trust will pass to the child’s children and not to someone else.
As you can see, there are many ways to ensure your estate plan is designed to effectively achieve your estate planning wishes. A discussion with a qualified estate planning attorney is advised to investigate placing your assets in trust for the benefit of your loved ones.
- How Often Should I Meet with an Estate Planning Attorney? - January 18, 2018
- Tax Law Changes for 2018 - December 29, 2017
- Dedicated Gardeners & Creative Spaces in Annapolis, MD - May 30, 2017
