A trust can be a powerful estate planning tool. Trusts can never go wrong until and unless they are being used correctly. However, trusts are not as simple as they may sound. You should get expert legal advice from a trusted professional to avoid issues in the long run.
While trusts in an estate plan can be beneficial, they also have certain drawbacks. It is essential to know the correct facts to make an informed decision. It is recommended to speak to trust lawyers Litvack Dessureault LLP to be fully aware of the decisions you are making.
Pros and cons of having a trust in your estate plan
- A trust avoids probate.
When you die, the assets in your estate plan go through a legal process called probate. Probate is a complex, expensive, and lengthy process. When assets are put in a trust, they bypass probate, therefore ridding your family members of a lot of trouble. Your heirs can get their inheritance without getting involved with the court.
- A trust protects your property.
Most people include their biggest assets in trusts because they stay protected. Understandably, you would also want your assets to be protected for your loved ones. Estate planning can reduce home care fees and save your loved ones from some unforeseen costs.
- A trust keeps your financial matters private.
Probate is a legal process; therefore, it makes your financial matters public. Since the assets in a trust do not need to go through this process, these remain private. It keeps your assets and loved ones protected from prying eyes.
- Revocable trusts do not protect your assets.
There are two types of trusts- revocable and irrevocable trusts. While irrevocable trusts protect your assets from creditors, that is not the same as revocable ones.
- Tax liabilities.
If you do not get proper tax advice from an expert before setting up a trust, your loved ones may have to face adverse tax implications. They could face an unexpected bill for Capital Gains Tax, Income Tax, Stamp Duty Land Tax, etc.
- Additional paperwork.
It is not easy to plan an estate as it involves a lot of paperwork. When you add trusts to the mix, the paperwork is even more. Now, this is no issue if you have an attorney to handle things for you. However, if you are doing it alone, you may have to face various issues. Not to mention, the stress for your family members increases.
These are the pros and cons of including trusts in your estate plan. Understand them and consult with an attorney to get into the details.