A good estate plan will avoid problems and protect your assets. Usually, a modern day estate plan will use revocable trusts to:

  1. avoid probate and perhaps,
  2. leave assets in a protected manner – “in trust.”

Using trusts maximizes your privacy, avoiding unnecessary court involvement and expense.

And, if you leave assets to loved ones, such as spouse or children, in trust, then the assets can be protected from most lawsuits and guaranteed to stay in the family

Question: When we leave assets in trust, what are we using trusts to protect from?

Answer: Unnecessary estate taxes, unnecessary acceleration of income taxes on retirement plans, unnecessary exposure to loss in a lawsuit such as a medical malpractice claim, a car accident, a divorce.

Question: When we leave assets in trust, what are we using trusts to accomplish?

Answer: estate tax avoidance, asset protection and control.

Question: What do you mean by “control”?

Answer: Well, you can use trusts to control assets and determine who will ultimately benefit.

For example: A can leave to B in trust for B’s benefit with remainder to C. The result could be that B has control and benefit of funds during B’s life but when B passes, C becomes the beneficiary.

What does this do? It can assure that assets will stay in the bloodline. It can assure that you can benefit a loved one if they survive you, and guarantee the remainder will go to another loved one.

The best example of this is in a second marriage. Let’s say Jack and Jill are a married couple and they do not have a prenuptial agreement. They each have a child from a prior marriage.

They agree that all their assets are separate and will go their child. But they also want to provide the surviving spouse with the ability to live in the house during his or her life, and to make sure that their half then goes to their child. Using a trust is the best way to accomplish the above.

Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate and elder law planning attorney. www.mwinnesq.com