WiserAdvisor – Blog

Main Menu

  • Main
  • Financial Advisor Guide
  • Financial Planning
  • Retirement Planning
  • Education Planning
  • Investment Management
  • More
    • Personal Finance
    • Estate Planning
logo
Header Banner

WiserAdvisor – Blog

  • Main
  • Financial Advisor Guide
  • Financial Planning
  • Retirement Planning
  • Education Planning
  • Investment Management
  • More
    • Personal Finance
    • Estate Planning
Estate Planning
Home›Estate Planning›6 Things to Know About A Trust-Based Estate Plan

6 Things to Know About A Trust-Based Estate Plan

By WiserAdvisor Insights
January 7, 2020
1369
1
Share:
Trust-based-Estate-Plan

Last Modified on January 17, 2020

Estate planning can seem tricky. It is a big responsibility to ensure that your descendants are secure and content when you are not around anymore. It is also important to make sure that your hard-earned assets are not wasted away in taxes and land up in good hands. 

Apart from the fact that estate planning helps you manage your assets for the future, it is also a great way of keeping your taxes in check. There are several methods of estate planning, one of which is a trust-based estate plan. 

Table of Contents

  • What is a Trust?
    • 1. It Ensures Financial Security of Beneficiaries and Descendants
    • 2. It Protects Your Assets 
    • 3. It is Useful in Avoiding Probate 
    • 4. It Helps in Managing Personal Finances 
    • 5. It Can Reduce Tax Liabilities
    • 6. It Facilitates Better Planning
  • To Sum it Up

What is a Trust?

A trust is an agreement that allows a trustee or third party to hold assets on behalf of a beneficiary. A trust can be based on several arrangements. The passing or holding of assets can also be specified with respect to the beneficiaries. There are broadly two types of trusts:

  • Testamentary Trust: A testamentary trust is generally created using a will.
  • Living Trust: A living trust on the other hand, is primarily built-up to avoid the probate court.

In trust-based estate planning, estate owners essentially entitle a trust to behold the title to their assets while they are still alive and facilitate easy transfer of these assets in case of the estate owner’s death or incapacity. In simple words, when you opt for a trust-based estate plan, you facilitate a transfer of your estate to your family without having to go to court.

Trust-based estate planning can be valuable as it not only helps with a planned estate transfer but is also helpful in tax planning, life insurance, property handling for minors, marital deduction bequests, charitable transfers, and credit shelter bequests. 

A trust-based plan is convenient as not only does it provide for a well-thought-of estate plan for beneficiaries and descendants, but is also exercisable for adult beneficiaries who can be made a part of the trust to hold the title till the estate owner’s demise.

Before you go down this road, it is vital to know how a trust-based estate plan can affect you, your family, and your estate. Here are 6 things to know before starting:

1. It Ensures Financial Security of Beneficiaries and Descendants

A trust-based estate plan ensures the protection and coverage of your beneficiaries when you are not around anymore. Setting up a clear and unambiguous estate plan can empower your descendants without unnecessary hassles. In a lot of ways, estate planning works in the same manner as life insurance. It helps the family overcome a period of grief in their lives and minimises the need for lengthy procedures. 

With a trust-based estate plan, you can protect the interest of your inheritors as mentioned in your trust agreement. 

In case of minors, the assets can be distributed after the age of 18 or 21 depending on state laws. As instructed in the trust agreement, the trustee, guardian, or parent is supposed to look after the estate and other financial matters for the minor. The same agreement can also be used to clearly define the inheritance process of an adult beneficiary. 

2. It Protects Your Assets 

Very few people understand and realize the need for a solid estate plan. However, when it comes to distributing assets, it is always better to be proactive than delay things out of ignorance. Setting up a robust trust-based estate plan not only protects the interest of your beneficiaries when you are not around but is also an excellent tool to manage your assets and estate when you are alive.

3. It is Useful in Avoiding Probate 

Probate is a judicial process that helps in determining beneficiaries and evaluating the assets and estate of the deceased. The probate process can be time-consuming, costly, and challenging for a grieving family. A trust-based estate plan is a good alternative to a probate as it ensures that the beneficiaries are not exposed to lengthy legal processes. 

4. It Helps in Managing Personal Finances 

An estate plan can also double-up as a personal finance plan. A trust-based estate plan can be helpful in managing assets while the estate owner is still alive. 

5. It Can Reduce Tax Liabilities

Estate taxes can be extremely burdensome and if planned poorly, you can lose a significant amount of your estate to taxes. A well-devised trust-based estate plan can reduce both state and federal estate tax to a great extent.  

6. It Facilitates Better Planning

Matters of asset distribution can lead to major disputes. Hence, setting up things in order is important to maintain harmony in a family. It is crucial to streamline the transition into a smooth one. A trust-based agreement clearly defines who inherits which assets and avoids disagreements that may occur over inheritance. 

To Sum it Up

Setting up a trust-based estate plan can ease things for the estate owner as well as the inheritors. A robust estate plan ensures that the beneficiaries get to enjoy well-managed assets with little or no taxes liabilities. It also offers better peace of mind and eliminates the costs associated with a probate. 

Do you want to keep your loved ones away from lengthy court procedures? Get in touch with financial advisors to know more about how you can set a trust-based estate plan for the well-being of your family. 

Tags#financial advisorEstate Planningfinancial planningFinancial securityTrust
Previous Article

Itemized Deductions: A Beginner’s Guide

Next Article

All About Withdrawing Retirement Funds

0
Shares
  • 0
  • +
  • 0
  • 0
  • 0
  • 0
WiserAdvisor Insights

WiserAdvisor Insights

A team of dedicated writers, editors and finance specialists sharing their insights, expertise and industry knowledge to help individuals live their best financial life and reach their personal financial goals. We believe that there is no place for fear in anyone's financial future and that each individual should have easy access to credible financial advice.

Related articles More from author

  • Financial-Planning
    Financial Planning

    5 Misconceptions About Financial Planning that You Must Steer Clear Of

    December 31, 2019
    By WiserAdvisor Insights
  • Market-Timings
    Investment Management

    The Advantages and Disadvantages of Market Timings

    May 5, 2021
    By WiserAdvisor Insights
  • Plan-to-save-for-your-child
    Education Planning

    How Do You Plan to Save for Your Child’s College?

    January 14, 2020
    By WiserAdvisor Insights
  • Retirement-fund
    Retirement Planning

    All About Withdrawing Retirement Funds

    January 7, 2020
    By WiserAdvisor Insights
  • Social-Security-Payment
    Retirement Planning

    What Is the Social Security Payment Schedule?

    January 4, 2020
    By WiserAdvisor Insights
  • Estate-Planning
    Estate Planning

    Three Estate Planning Documents Everyone Needs

    March 5, 2020
    By WiserAdvisor Insights

You might be interested

  • FIRE
    Retirement

    FIRE (Financial Independence, Retire Early) as a Retirement Strategy

  • Financial Advisor
    Financial Advisor

    Who Are Financial Advisors and What Do They Do?

  • Roth-IRA
    Retirement Planning

    What is a Roth IRA?

Don't miss out! Get our Helpful Financial Tips Newsletter

  • Popular Posts

  • The benefits of working with a financial advisor - WA

    The benefits of working with a Financial Advisor

    By WiserAdvisor Insights
    July 16, 2019
  • Financial-Professional

    How to prepare for a meeting with your Financial Advisor

    By WiserAdvisor Insights
    July 8, 2019
  • Do's & Don't investment portfolio

    The Dos and Don’ts to Protect your Investment Portfolio in a Bear Market Amid The ...

    By WiserAdvisor Insights
    April 22, 2020
  • retirement-accounts

    Choosing the Best Retirement Accounts

    By WiserAdvisor Insights
    July 8, 2019
  • Retirement-Planning

    Retirement Planning checklist

    By WiserAdvisor Insights
    July 8, 2019
  • Why investing for goals is the right way of investing

    Why Investing for goals is the right way of Investing?

    By WiserAdvisor Insights
    July 16, 2019
  • Portfolio diversification

    5 Dangers of Over-Diversifying your Portfolio

    By WiserAdvisor Insights
    July 26, 2019
  • Financial Planning for couple

    The Complete Guide on Financial Planning for Couples

    By WiserAdvisor Insights
    August 1, 2019

Categories

  • Business Finance (2)
  • Education Planning (29)
  • Estate Planning (20)
  • Financial Advisor (1)
  • Financial Advisor Guide (27)
  • Financial Planning (112)
  • Investment Management (54)
  • Personal Finance (9)
  • Portfolio Management (1)
  • Retirement (9)
  • Retirement Healthcare (1)
  • Retirement Planning (79)
  • Retirement Plans (1)
  • Uncategorized (2)

The blog articles on this website are provided for general educational and informational purposes only, and no content included is intended to be used as financial or legal advice. A professional financial advisor should be consulted prior to making any investment decisions. Each person's financial situation is unique, and your advisor would be able to provide you with the financial information and advice related to your financial situation.

WiserAdvisor is America’s oldest and largest independent network of screened financial advisors. We make it easy and convenient for consumers to find and connect with advisors in their area. We have successfully helped over 100,000+ individuals find their best financial advisor since 1998 with no match fees, no commitments, no obligation, and complete confidentiality. WiserAdvisor has been featured in The Washington Post, The Washington Journal, ABC, CBS, Yahoo and has been seen in numerous other leading financial news and information websites.

Follow Us

  • Recent

  • Popular

  • Financial Planning for Entrepreneurs

    Financial Planning for Entrepreneurs

    By WiserAdvisor Insights
    July 1, 2022
  • Financial Planning for a Baby

    Financial Planning To Prepare For a New Child

    By WiserAdvisor Insights
    June 20, 2022
  • Lower Your Financial Advisor Fees

    How to Lower Your Financial Advisor Expenses

    By WiserAdvisor Insights
    June 13, 2022
  • The benefits of working with a financial advisor - WA

    The benefits of working with a Financial Advisor

    By WiserAdvisor Insights
    July 16, 2019
  • Financial-Professional

    How to prepare for a meeting with your Financial Advisor

    By WiserAdvisor Insights
    July 8, 2019
  • Do's & Don't investment portfolio

    The Dos and Don’ts to Protect your Investment Portfolio in a Bear Market Amid The ...

    By WiserAdvisor Insights
    April 22, 2020

Contact Us

Corporate Headquarters

12150 Monument Drive, Suite 700
Fairfax, VA, 22033

Business Hours

8:30 AM – 5:00 PM EST (Monday – Friday)

Email Address

wa.assistance@wiseradvisor.com

Phone Number

(703) 651-2060

Fax Number

(703) 259-4487

  • Privacy Policy
  • Terms & Conditions
© Copyright 2021 WiserAdvisor.com. All Rights Reserved.

Add WiserAdvisor - Blog to your Homescreen!

Add