Planning for the future is about more than growing wealth. It’s about safeguarding it from threats. Without proper planning, creditors, lawsuits and estate taxes can decimate your assets, leaving your beneficiaries without the inheritance you intended.
Adding one or more trusts to your estate plan can offer a powerful tool to protect your assets. Choosing the right trust(s) can allow you to keep your financial legacy intact and benefit your loved ones. Here are some trusts to consider adding to your estate plan.
Revocable vs. irrevocable trusts
A revocable trust can offer advantages like maintaining control over your assets while you’re alive. Unfortunately, it does not typically provide strong asset protection or shield against creditor claims.
In contrast, an irrevocable trust offers robust protection. Once you transfer assets into the trust, they are no longer considered your property. This means creditors and lawsuits generally cannot reach them. Additionally, irrevocable trusts can help reduce estate tax liability for your beneficiaries.
Credit shelter trusts
For married couples, a credit shelter trust helps to minimize estate taxes. The state of Washington imposes estate taxes on assets exceeding a certain threshold. However, this type of trust allows spouses to maximize exemptions and preserve wealth for their heirs.
By strategically structuring a credit shelter trust, couples can prevent large portions of their estate from being taxed, helping to ensure that their children or loved ones receive a greater inheritance.
As you can see, the right trust can do much to secure your financial future and protect your assets from unnecessary risks. Since these are just two trust options to consider, it is wise to seek a legal opinion about other ways to safeguard your valuable assets.
