- One of the advantages of using an inheritance trust is that it will allow your beneficiaries to skip probate when you die. If you die without a trust, your assets will have to go through the probate process before they can be distributed to your beneficiaries. This can make the process take much longer than it should be and could potentially add legal costs for your beneficiaries. By creating a trust, you give the trustee the power to distribute your assets without going through the court.
- If you use an irrevocable trust for your estate planning process, you can also lower estate taxes for your beneficiaries. Estate taxes are taxes levied on the total value of your estate. When you put property into an irrevocable trust, the property is technically removed from your estate and does not count toward the total value of it when you die. This can get your estate under the estate tax exemption amount and potentially eliminate estate taxes.
- When you accumulate debt and have a lawsuit filed against you, creditors could come after your property to satisfy the debt. If you hold the property in an irrevocable trust, the property will no longer be tied to your personal estate. In this case, creditors would not be able to come after the value of the property. This would help keep your assets safe for your beneficiaries so that you would not have to worry about your personal debts causing any problems.
- Another reason that you may want to set up a trust is so that you can put restrictions on your beneficiaries. Instead of having the property automatically transferred to your beneficiaries upon your death, you can specify exactly when you want your property to be transferred. This way, you could hold off on transferring a large amount of money to a young beneficiary if you did not feel like he was ready to receive the money until a certain age.