Gift giving is the surest way to help loved ones of all ages, establish a legacy, and reduce estate taxes. Yet, many people are hesitant to make significant gifts to loved ones because of the potential pitfalls.
“The wealth could be wasted or spent unwisely by the recipients…”
“Simple mismanagement by an unsophisticated heir might cause the money to disappear in scams or unwise investments or spending…”
“The wealth could be dissipated though gambling, substance abuse, or bankruptcy…”
“The wealth eventually could leave the family in a divorce…”
However, those pitfalls can be avoided with some creative giving strategies by gifting through trusts. Creating an irrevocable trust will give your family peace of mind that your assets will remain secure and be disbursed properly in a timely manner.
What are the main advantages of having an irrevocable trust?
• Asset Protection. Assets placed into an irrevocable trust are not considered to be owned by the grantor. Therefore, if you place an asset into an irrevocable trust, it will be instantly protected from creditors and judgment liens and may be protected from bankruptcy trustees and divorce as well.
• Avoiding Probate. Trusts allow your family to avoid probate. Probate is an arduous process that is costly and time consuming. It could delay the distribution of your assets for years. Additionally, probate can cost up to 10% of the value of your estate.
• Tax Advantages. The assets of the trust are not counted as part of your estate, so the estate taxes are lower or even completely eliminated. In addition, many irrevocable trusts also reduce your annual income tax burden.
• Lower Court and Attorney Fees: Distribution through a trust can save you on the attorney and executor’s fees charged to probate a will.
• Asset Protection for Beneficiaries. An irrevocable trust can protect your beneficiaries from having their inheritance taken from them through litigation, bankruptcy, creditors or divorce.
• Privacy. Irrevocable trusts are private documents and not subject to public record. Your family secrets and private bequests are not subject to public scrutiny or the eyes of undesirable claimants.
It is important to remember that a trust will be more beneficial to you and your family if it is executed before you need it. Although some people establish trusts after they inherit money, the benefit of privacy will be lost if you wait. Less than half of all Florida residents have an estate plan in place yet the death rate in Florida has held steady at 100 percent. The reason for this lapse in judgment is most likely due to a focus on the word “estate” rather than the word “planning.” The two biggest misconceptions made by most South Floridians that lack comprehensive estate planning is that they are either too young to worry about it or not wealthy enough to worry about. However, the fact remains that very rarely is estate planning solely about the money.
A Florida estate planning attorney can advise you on the type of trust that will most benefit you and your situation. This will give you and your family financial security and peace of mind.
For more information on successful Florida estate planning and probate techniques, please contact the South Florida law firm of Wild Felice & Partners, P.A. at 954-944-2855 to schedule your free consultation. It’s a Wild world. Are you protected?SM