Creating trusts is one of the most valuable tools in the estate planning process for Arizona residents. These legal documents can offer you and your heirs several advantages during your lifetime and after your passing. Consider these advantages when determining what estate documents will benefit you most.
Avoiding probate is the main concern
Assets specified in a will have to go through the probate process, but most assets in trusts don’t. Trust agreements remain private, too, whereas wills become part of the public record. Privacy is essential for some people who want to keep their financial matters out of public view. Trusts also make distributing your assets simpler after your death.
However, you and your heirs will also experience other essential benefits. Consider the following:
- You can easily customize your estate plan
- Possible tax benefits
- Can benefit you during illness or disability
- Allow for flexibility with changes in terms
You’ll find many types of trusts with specific functions, but all fall into two main categories: revocable and irrevocable. Revocable trusts offer the most flexibility because you can change their terms or even dissolve them anytime. Trusts can allow you to have an income during uncertain times. You can also add to revocable trusts as your needs and wishes change.
Managing your assets
Another primary concern for those developing estate plans is providing tax benefits for your heirs after your death. Irrevocable trusts are usually the best for this purpose. However, you can also use an annual gift allowance to bequeath money to your children and other heirs. If you stay within the annual gift exemption amount, that money will not be subject to estate taxes and can potentially reduce your own income taxes.
A good rule of thumb is to take your time with estate planning and look over various trusts and other financial instruments that will give you and your family the greatest advantages. Remember that you can add to your estate plan anytime with additional trusts. You should also review your estate documents every few years to ensure that what you have set up meets your current needs.