You may think that leaving a will sorts out all your estate plans. However, that is not entirely true. For instance, your heirs may mismanage your estate, and there will be nothing to show for it within a few years. In short, a simple will exposes your estate to the uncertainties of the future.
You may find it in your beneficiaries and descendants’ best interests if you protect your family’s wealth by putting your assets in a lifetime trust. There are several benefits to doing so, as detailed below.
Protection upon divorce
In most states, Illinois included, an inheritance is not considered marital property and hence not subject to division following a divorce. Laws such as this exist to ensure that the family wealth remains within the confines of your descendants. While assets under a will may find their way into joint ownership with your former spouse, having them in a trust means that they are listed in the trust’s name.
Protection from creditors
Since trusts are held under the trustee’s name, creditors cannot attach assets from your estate to recover debts. As such, having a lifetime trust may protect your family wealth from such debts that your beneficiaries may get themselves into.
Having your estate in a lifetime trust may minimize any payable taxes. Unlike a will where beneficiaries must pay estate tax, trusts remove such properties from the benefactor’s taxable estate.
Greater control of your estate
You may not have much of a say with a will on where your assets will go after the designated beneficiary dies. However, you can dictate how your assets will be distributed with a trust, even among your descendants. Therefore, you can exercise greater control of your family wealth to benefit your lineage.
The perpetuity of your family wealth may rest with the actions you take right now. So on that account, it is crucial to make informed decisions on how things will play out after you are gone.