Does a Living Trust Avoid Estate and Probate Taxes?
A living trust does not avoid estate tax or Probate tax. However, a living trust prevents heirs from attending probate court, a lengthy process where the deceased assets are listed and reviewed. In this way, a living trust minimizes the taxes levied on the estate, as the true value is obscured.
Living Trust Vs. Will Writing
People create living trusts and wills to secure their assets after death. They create these documents while they are alive and detail how they want to distribute what they own. Moreover, grantors can update these documents as long as they are alive, usually after major events that offer significant changes to an estate plan.
Living trusts and wills differ based on when they become active. Living trusts become active as soon as a grantor creates one. Meanwhile, a will only becomes active after the grantor dies. Either way, living trust and will writing needs the proper language to ensure heirs can maximize the amount they inherit.
How Does a Living Trust Minimize Estate Taxes?
Living trusts help minimize the amounts of money that estate taxes take out of an heir’s inheritance. Estate taxes will take a portion of the money that is involved or the value of a property that a grantor hands down to an heir.
Getting a Bypass Trust or A-B Trust To Avoid Estate Taxes
Married couples can also avoid estate tax through Bypass Trusts or A-B Trusts. Filing these trusts allows spouses to transfer property between each other without being subject to estate taxes or gift taxes.
A-B Trusts have specific designs meant to save estate tax. Suppose a couple has children and intends to leave them some property. One spouse dies, giving the property ownership to the children. However, the surviving spouse still has permission to use the property.
The surviving spouse does not own the property legally. Moreover, it is not subject to estate tax once they die. Thus, the couple must explicitly state the terms of their trust to ensure estate tax avoidance.
Why Do People Need Lawyers To Help Handle Living Trusts?
Lawyers understand the work that goes into writing a living trust or will. These documents require comprehensive terms to ensure survivors obtain the maximum amount a person intends to leave for them.
Estate planning attorneys, in particular, can help determine property values. These experts will appraise assets and offer professional advice in distributing them to heirs or beneficiaries after death.
Assessing how much assets are worth will require reviewing tax returns and analyzing deeds. Real estate experts and stockbrokers may potentially join the process, depending on the kind of property involved.
Essentially, having an estate planning lawyer help write a living trust will ensure that all documents are in order and written as intended.
Get an Estate Planning Lawyer To Help Write a Living Trust
Living trusts only help property heirs avoid probate court after the grantor passes away. They will still be subject to estate taxes, depending on the value of properties and money involved in the inheritance. However, they can still minimize how much an heir will contribute to estate tax if the property in question is eligible.
Some married couples can save on estate taxes by transferring property to each other. With this type of trust, the property goes to heirs but surviving spouses can still use the property meant to go to them. The surviving spouse does not legally own the property, which will not be subjected to estate tax.
Anyone who aims to minimize the estate tax their heirs will pay after inheriting property must ensure that their living trust uses the right language to secure their assets’ conditions after they die.
Creating an estate can be a difficult and arduous task and the most basic mistakes could put your assets at risk. That’s why it’s so important to hire a lawyer.
The Estate Planning attorneys at Albers and Associates will make sure that your assets are kept safe and secure for future generations. If you or a loved one is working on estate planning, please reach out to us today.The post Does a Living Trust Avoid Estate and Probate Taxes? appeared first on Albers and Associates.