Estate Conservation You Can Trust

For many people concerned with preserving their estates, “probate” is a four-letter word. It can cause the courts to put a freeze on assets that could last until the probate process is completed. Probate records are open to the public, making it a privacy concern. Furthermore, probate can be costly. The estate may need to pay attorneys, appraisers, and court costs before assets can go to the heirs. In fact, probate costs can eat up as much as 10% of an estate.¹

Certain types of assets, such as property held in a trust, are not considered part of an estate and can avoid the probate process. Trusts are popular estate conservation tools that can help facilitate the smooth transfer of estate assets and maintain the family’s privacy.

A trust is a legal entity wherein a person (the grantor) gives ownership of his or her assets to a separate entity (the trust), which holds the property for the benefit of a third party (the beneficiary). A trust can contain any sort of property — money, stocks, bonds, real estate, business interests, personal possessions, etc.

Because assets in a trust are technically owned by the trust, they are not figured into the grantor’s estate. The trust is overseen by a trustee, who must distribute the assets based on the stipulations outlined in the trust.

Different types of trusts can be used to distribute wealth in many different ways. Here are a few common types of trusts that can be established during your lifetime and/or in a will.

• Living trusts are established during the grantor’s lifetime. The grantor can name himself as the trustee and name a co-trustee who can handle the affairs of the trust after the grantor’s death.
• Charitable trusts can be established to pay a charity either a regular income for a set period or a lump sum at the end of the period. Heirs can also benefit from these types of trusts.
• Incentive trusts can be used to help future generations strive for worthwhile goals such as attaining higher education, starting a family, or working for a nonprofit organization.
• Supplemental or special-needs trusts can help provide for a child with physical or mental disabilities and help ensure that the child qualifies for government assistance programs.

The use of trusts involves a complex web of tax rules and regulations. You should consider the counsel of an experienced estate planning professional and your legal and tax advisors before implementing such strategies.

Your legacy is too important to potentially be left up to the courts to sort out.

1) 2009 Field Guide, National Underwriter

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by StoneRiver–Emerald. © 2009 StoneRiver, Inc.