Establishing a charitable trust is an excellent way to preserve important resources and support causes that you value, allowing you to still benefit financially. If these trusts are properly constructed and thoughtfully planned, they may serve as a strong component of any estate plan. They can help you establish a legacy that may last long after you are gone, helping to tell your story and furthering the issues that you care about deeply.
When many people think about establishing a charitable trust, it seems like the kind of thing that only the super-rich do, and even then, mostly for the tax advantages. It is true that charitable trusts offer significant tax advantages. However, they are not only a tool for those with a considerable amount of money. In fact, even moderately sized estates may benefit considerably from using a charitable trust as part of an estate plan.
Here in California, owning a home is an expensive proposition, and in almost all cases it pushes the owner past the relatively low estate threshold of probate. In very simple terms, if a person owns real estate in California at all, their estate is almost certainly subject to probate upon their passing. While this is a frustrating reality, especially considering the high taxation that Californians already bear, there are some ways around this issue, including placing a home in a trust.
As our parents and others we love grow older, their needs may change dramatically. Without careful planning for the future, even those who saved for a rainy day or who own significant resources may see all that they worked for drained away by the high costs of late-in-life care. To help cushion these costs, the government offers programs like Medicaid to those who qualify, but what if your parent has too high an income or owns too large an estate to use government assistance?
When one sets out to create a sound estate plan and protect assets for beneficiaries, careful planning is critical. It is important to consider the recipient of a particular asset and the difficulties he or she may face that could pose a threat to the asset itself. This is especially true for those who wish to leave assets to a beneficiary who already carries a great deal of debt or deals with creditors using collection tactics.
For many people who realize it's time to put together some estate planning documents to protect their assets, a living trust provides both protection and flexibility. While there are many kinds of trusts, most offer protection at the expense of flexibility, or vice versa.
When discussing estate planning, it's hard to talk for more than about five minutes without bringing up trusts. In modern estate planning practice, trusts are one of the most commonly used tools to help an individual protect his or her estate and determine how that estate gets distributed when the time comes.
Choosing the person you want to serve as the trustee of your trust is an important decision that may impact your estate significantly, for better or for worse. In some cases, the relationship between you and the trustee may deteriorate, and you may realize it is time to consider firing him or her and looking for a suitable replacement. If you find yourself thinking about this course of action, it is always wise to take a deep breath and consider some valid reasons you may have for removing a trustee before it is too late.
Trusts offer protection from many threats to an estate, but this security often comes at the expense of flexibility and control of one's assets. In general, the greater control one retains over the assets he or she places in a trust, the fewer protections those assets enjoy. At some point, a trust creator may wish to change the terms of the trust, but this is not always possible.
Avoiding probate is not always simple or even possible, but it usually well worth the effort to do so. On of the most common tools used to circumvent the probate process is forming a revocable living trust to hold assets that would otherwise pass through probate and likely diminish greatly in the process.