Woodbridge Trust Lawyers Helping Families Secure Their Assets For Future Generations
Trusts are becoming a popular estate planning tool because they provide more control over how assets will be passed on to beneficiaries, provide certain tax savings, and can also help keep the estate out of probate. There are a few different types of trust you can set up, depending on your personal and financial goals. The Johnson Law Firm, PC, has helped many clients to set up their trusts and administer them throughout the years. Here are a few common questions we get on a daily basis.
What is a Trust and How is it Different From a Will?
A will is a public document that lists your wishes for how your assets should be divided after you die. It requires probate in order to be validated and executed. You still own your assets, and your will isn’t in effect until your death. A trust, on the other hand, is a legal entity that serves as a container for all your assets – properties, bank accounts, life insurance, monetary assets, etc – and once it is created, it becomes the owner of any asset you place into it.
By transferring assets into a trust, you can control exactly who will receive them after you die and when. Unlike a will, it is not a public record document and your estate remains private because it does not require probate before it can be passed on. In addition, a trust can provide significant tax savings, shorten the amount of time it will take for your heirs to receive their share of the estate, and give you greater control by allowing for stipulations of how much each person should receive and when.
For example, if you have a grandchild you would like to benefit, you can add provisions to your trust that say the grandchild can receive $5000.00 every year for 5 years after they turn 18, rather than receiving a lump sum that he or she may not be able or mature enough to administer. When you set up a trust, you become the trustor. You will need to name a trustee who will administer the trust on your behalf, as well as the beneficiaries of your trust.
What are the Advantages and Disadvantages of Setting Up a Trust for Estate Planning Purposes?
The main advantage of a trust is that it can keep you out of probate court and shorten the time required to distribute your assets. When your estate requires probate, that means your heirs will likely not receive their inheritance for several months, and it can take up to a year in cases where the estate is larger or more complex. Going through probate usually means that 2 to 4 percent of your estate will be lost to court costs and attorney fees. By staying out of probate, you may not only save by not paying the cost of probate proceedings, but you can also reduce or avoid estate taxes and gift taxes, depending on the size of your estate and specific circumstances.
Because your assets are owned by the trust, it offers protection from potential creditors and lawsuits. Trusts are flexible and can be complex, and while they can save your family time and money in the process of transferring your assets after your death, they can also be expensive to set up and maintain. This can be a disadvantage for many, and for that reason, it is important to speak to an experienced estate planning attorney to learn if a trust would be beneficial to your particular situation.
How Much Does a Trust Cost – and Do I Need An Attorney?
The cost of setting up a trust varies depending on the type of trust you choose and on the level of services your attorney provides. On average, a trust can cost between $1000.00 and $3000.00, with a national average of about $2500.00. Your costs may be higher or lower depending on your specific situation.
Do I Need an Attorney?
A trust is not the right solution for everybody. A skilled attorney can help you decide whether a trust is right for your needs, and what other estate planning documents and tools you may still need to set up in order for your estate to be transferred to your heirs according to your wishes. At the Johnson Law Firm, PC, our attorneys focus on estate planning for clients in Woodbridge, VA, and surrounding areas and would be happy to guide you through your options to preserve your legacy for the next generation. Contact our office at 703-670-0761for an initial consultation to get started.