Life is all about planning. You plan even what happens to your hard-earned assets after your death. To ensure your loved ones and future generations gain from what you have, consider estate planning. This entails more than having a will, you can use trusts, such as a legacy trust. A legacy trust can ensure your children, grandchildren or great-grandchildren profit from what you possess, whether in your absence or presence.
Below is more information on what a legacy trust is and why it is beneficial to you.
What Is a Legacy Trust?
A legacy trust, also known as wealth trust, is an irrevocable trust set aside for future generations. Being irrevocable means the trust terms cannot be changed. The legacy trust is eligible for use in your presence or absence. You fund it mainly through annual gifts.
It needs a trustee who can either be a child or another donor's family member. Unfortunately, the grantor cannot be the trustee of the legacy trust. The donor of the legacy trust states in the will who the beneficiaries are and how they can use the money; be it for education, health care, or family upkeep. Even so, the legacy trust donor can use it for emergencies like health care.
What Are the Benefits of Having a Legacy Trust?
A legacy trust is valuable to both the donor and the beneficiaries in the following ways;
Reduced Tax
Funds that are in the legacy trust are exempted from some IRS (Internal Revenue Service) rules. For this reason, if you intend to reduce the total amount taxable from your net worth, deposit some into the legacy trust. Note that funds in the legacy trust escape the generation-skipping tax.
With these funds currently being about $15,000 per year, you may lose a lot to the tax department. Through the legacy trust, you and the generations ahead save thousands of dollars.
Protect Your Money
Consider a legacy trust if you have an upcoming bankruptcy case and are worried about losing your assets to the chapter 7 bankruptcy laws. All funds under the legacy trust are protected from creditors and debtors. Even if this amount exceeds bankruptcy exemptions, creditors cannot use it to clear what you owe.
Further, it is not subject to probate if you die. It is protected when in the hands of your beneficiaries. They cannot lose it in case of divorce, creditors, or court judgment.
Makes Good Gifts
Nothing will show your future generations that you love them more than leaving something behind for them. This legacy trust will be heaven-sent to them when they need funds for issues like a good education or health care. Since it is possible to lose your assets to creditors or other family members, particularly if you don't have a will, secure your special gift for those not yet born by having a legacy trust.
Ideal Place to Save for Emergencies
The money in the legacy trust can save you when you require urgent medical funds. Although this was not the initial intention when creating the legacy trust, it can be a big saver. Therefore, when you have a legacy trust account, in the back of your mind, you know you have a savings account that creditors cannot access if you are bankrupt.
Get Started With Your Legacy Trust Now
Getting a legacy trust can be a complicated process that needs knowledge and experience. At Law Offices of James C. Shields, we understand this. We are knowledgeable and professional in issues surrounding a legacy trust. Our fees are reasonable, and strive to offer satisfying results. Contact us today and secure your loved ones future.
