It is true, a trust can be used to safeguard assets from estate taxes, however, that is not the extent of what a trust can accomplish. The two primary purposes of a trust are to manage assets during life and control their distribution at death.
During life, a trust can address issues encountered in the event of incapacity. A properly drafted trust, used in conjunction with other estate planning documents, can eliminate the need for court involvement during a period of incapacity. There are also types of irrevocable trusts that can help protect you from the cost of care if you need nursing or home health care via the State’s Medicaid program.
At death, properly drafted trust can address remarriage or blended family concerns. For instance, in the event a surviving spouse remarries, a trust can ensure that, at his death, his assets pass directly to his children rather than to the children of this new spouse, even though Arizona and New Mexico are community property states.
I’ve only mentioned a few things beyond estate tax mitigation that a trust can achieve. A properly drafted trust can achieve many other things. It can protect beneficiaries, can be used as an income or capital gains tax planning tool, and it can even be used to incentivize certain achievements. . Consulting with an experienced estate planning attorney to discuss your unique situation is the first step to putting a proper plan in place.
Contributed by Morris Hall, PLLC Phoenix and Prescott Estate Planning Attorney, Andrea L. Claus.
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The attorneys at Morris Hall have 100’s of years of combined experience ensuring that families’ assets are protected from probate, unnecessary taxes, creditors, ex-spouses and Medicaid spend-down. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Carefree, Tucson, Oro Valley, Prescott, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
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