4 Signs You Could Benefit From An Estate Planning Trust

Ideally, you should make a plan for your assets before you reach the end of your life or become too ill to take care of matters. There are many different options, and depending on your situation, you may need an estate planning trust. Here are five signs that you should contact an accountant about an estate planning trust. 

1. Your Estate Exceeds the Capital Gains Threshold​ 

The federal government and many states have capital gains taxes. These taxes apply to the value of your estate over a certain threshold. For example, as of 2022, the federal capital gains tax applies to a single person when they have assets worth over $12.06 million

The tax is assessed on the value of your assets over that amount. If your estate has $15.06 million of assets, the tax will apply to $3 million. Your state may have a lower threshold. An accountant can help you use a trust strategically to get around or reduce this tax. 

2. You Want to Reduce Your Spouse’s Estate​ 

A trust can also help to protect your spouse from the estate tax. When the trust owns your assets, your spouse can continue to use them. 

But because the trust owns the assets, your spouse doesn't have to worry about increasing the size of their estate and potentially facing the estate tax after their death. 

3. You Want Your Heirs to Avoid Probate​ 

An estate planning trust can even be useful if you're not worried about the estate tax. When your assets go into a trust after your death, the trust now owns the assets. This can help you to avoid probate. 

Probate is a legal process that substantiates your will or determines where your assets go in the absence of a will. Basically, if you die without a trust, your heirs will have to wait for this legal process to be completed before they can take possession of your assets. A trust circumnavigates that roadblock. 

4. You Want Control over How Your Assets Are Distributed​

With a will, you can simply state where your assets go after your death. You don't have any additional control. A trust, however, has a manager or a trust administrator. 

The administrator can run the trust after your death, and this allows you to set conditions. For instance, you may want your grandchildren to receive extra money after they finish college or you may allow your kids to take extra money when they're buying their first home. A trust makes this possible.

To learn more about the advantages of an estate planning trust, contact an accountant today.