Estate Planning: Provide For Future Generations
Generally speaking, we have all worked our entire lives to provide for ourselves and our loved ones, and protecting that legacy at all costs is powerful. By appropriately planning for the future through a comprehensive estate plan, you can ensure that you retain partial or complete control of your legacy and that it can be put to its most impactful use for your loved ones long after you are gone.
What is a Trust?
A trust is a resource utilized in estate planning that allows owners of property or other assets to transfer ownership of those items to a trust. By doing so, the owners of the assets are no longer in charge of them (in most cases). In death, those assets are genuinely not calculated in the final estate, helping to avoid taxes for those left behind when done appropriately.
Trusts are an excellent way for asset owners to plan for the future and years to come, thereby continuing to care for their loved ones and future generations long after they are gone.
An irrevocable trust is one in which you cannot change the trust once it’s been created. Since this option doesn’t allow for easy changes, it may be less appealing; however, with no longer owning assets within irrevocable trusts, you may benefit from less taxes.
A revocable trust allows the creator of the trust more flexibility for changes that may occur throughout life, although it may offer fewer advantages from a tax standpoint.
Work with your experienced estate planning attorney to determine which trusts may be best for your current and future needs and create a customized strategy to benefit from for years to come.
What is a Qualified Personal Residence Trust?
When considering estate planning, one appealing resource for individuals is to utilize a Qualified Personal Residence Trust or QPRT. Our homes are often our most valuable asset, making them one of the most significant portions of our taxable estate.
By setting up a QPRT, property owners can ensure that the residence is transferred to an intended party, such as your children, at a less significant tax rate while they continue to live in the home until they pass.
For example, suppose you own a home or a vacation home and want to help avoid the value included in your taxable estate. In that case, you can work with an experienced estate planning attorney to set up a QPRT, including that asset.
How Are the Financials of the Asset Handled While the Original Owner is Alive?
Typically, when you transfer the asset into the trust, the intended beneficiary is a loved one. You will have a specified number of years to continue to live in the home, during which time you will be responsible for mortgage payments, maintenance, associated taxes, and more. If you continue to live through the end of the specified amount of time, you then will pay rent to the appropriate beneficiary to remain in the home to avoid including its value in your estate.
The house will transfer to the appropriate beneficiary after the specified number of years. At that time, the value and any appreciation are transferred, typically free of estate or gift taxes.
Another option should you live through the end of the specified number of years is to retain the residence in a trust for your spouse’s lifetime.
An additional benefit of a QPRT is that the assets within are protected against creditors that may pursue its value. Since you no longer technically own the property, the assets are safe from being garnished or otherwise pursued by creditors.
What is Probate?
One of the most appealing reasons for so many to create a comprehensive estate plan is to mitigate taxes and help the loved ones left behind avoid probate or portions of the probate process.
According to the State Bar of Michigan, probate is the court process by which the property of a person who has died (decedent or deceased) is distributed.” Assets included in the probate process are solely owned assets, those without beneficiaries, or assets not set up to transfer on death to another party.
The reason to avoid most or all of the probate process is that the assets held within the estate are subject to a lengthy and sometimes frustrating process. The beneficiaries or loved ones can’t access those assets during this time. Fees can also quickly add up during probate, making it costly for some.
Each estate and assets within will be different for each family. By working with your experienced estate planning attorney, you can ensure that you are properly set up for the unknown and that your intended beneficiaries can benefit from your hard work for years to come.
Your Legacy: Your Choices
A significantly appealing characteristic of a comprehensive estate plan is allowing you to remain in the driver’s seat. You have worked hard all of your life to provide for yourself and those you love, and setting up an estate plan can help ensure that unnecessary taxes don’t chip away at your legacy.
By working with an experienced estate attorney, you can determine which of the many resources available will be the most beneficial for you and your vision and create a tailored strategy to ensure your needs and wants are met, not only currently but throughout the rest of your life and beyond.
Contact our firm today at (248) 997-4394 to learn more. We have a proven track record of providing the results our clients need while treating them like family.
We look forward to serving you.