Discover How Valuable Estate Planning for Your Trust Can Be
Estate planning when a trust is involved may seem like a daunting task to investors who just want to provide for their families and other beneficiaries in the simplest way possible. But a small amount of planning goes a long way. If set up improperly, trusts can easily be abused by beneficiaries or creditors, completely defeating the intents of those who started them.
Here are some of the ways that estate planning ensures the assets you place in trusts actually serve your purposes.
Preventing Fund Mismanagement
Everyone has heard stories of trust fund babies who blow as much of their financial resources as possible the instant they take control. In many cases, bad investment skills and a lack of general worldly experience make it prudent for investors to protect their beneficiaries from themselves.
By working with an attorney that specializes in estate planning for trusts, you can easily create a fund with stipulations on how the money is to be used. You may not always be around to stop your children, spouse or other relatives from spending their money frivolously, but the spendthrift guidelines you include in their trusts may be what keep them out of dire financial straits. In addition, such disbursement schedules and rules often help beneficiaries develop better budgeting skills.
Protecting Your Assets from Third Parties
Your beneficiaries may have learned to manage their finances by the time their fund kicks in, but that doesn't necessarily mean that their track records will be spotless. If you're not careful about how you allocate the property held in your beneficiaries' trusts, it may be subject to seizure as a result of their debts.
Intelligent trust estate planning takes these contingencies into account. By working with a more experienced asset protection attorney, you can identify alternate financial products that are harder to seize because of their investment jurisdictions.
Remember that although many investors use offshore trusts for this specific reason, even these require asset protection planning. Different countries have unique tax rules and legislation that favors investors. Without experience investing in a wide range of locales, you may find it difficult to select an offshore asset protection plan that suits your long-term needs.
Strengthening Your Portfolio
Keep in mind that even the best-laid plans aren't guaranteed to go off without a hitch. For instance, you may find that you have to make modifications to your asset protection strategies as U.S. laws and IRS reporting rules change. While revocable trusts are great ways to leave yourself with room to make modifications, they don't enjoy some of the benefits that comparable irrevocable trust funds do.
With good estate planning, you don't need to invest assets into revocable structures, because you can create hybridized trusts that support subsequent modifications. Unlike many retirement funds that assess you penalties for changing your mind later on, offshore trusts can be custom managed via responsible, non-vested agents. These products help your assets retain their worth and keep your portfolio as profitable as possible.
Estate planning for your trust is critical to protecting your family after you're gone and keeping your property in the right hands. To learn more about international asset protection and related corporate structures, contact Nagel Law online.
IRS Circular 230 Notice: The Statements contained herein are not intended to and do not constitute an opinion as to any tax or other matter. They are not intended or written to be used, and may not be relied upon, by you or any other person for the purpose of avoiding penalties that may be imposed under any U.S. Federal tax laws or otherwise.