A living trust is a very valuable estate planning tool. It can be used in conjunction with other means, such as wills, to ensure your property and assets are protected. While you need to work with a certified public accountant when creating a trust, the following information provides a few of the basics that estate planners should know. 

Living Trust FAQ

How does a living trust work? 

A living trust is a way to manage your assets after you die. Property and assets are altered to show ownership by the trust, of which you are the trustee. You must also select a trustee to take over after you die — this person is responsible for settling the affairs of your estate and dispersing assets to heirs. Trustees can be friends or family, or they can be a professional, like an attorney or certified public accountant. 

What benefits do trusts offer? 

Unlike wills, trusts are not subject to probate. This is the legal process of proving a will’s validity and dispersing assets to heirs. Probate is a public process, which means the details of your estate could be discovered by anyone. Probate can also be costly, and the court might disagree with the estate holder’s wishes when it comes to asset division. 

Who should use a trust?

If you have minor children, a trust allows you to set up their inheritances in a managed way instead of providing one lump sum. People who own property outside of the estate they live in may also find trusts useful. If you don’t take this step, you’ll have to contend with two different sets of laws when estate planning. 

Can it help me save on taxes?

An irrevocable trust, which retains the same terms from the time of creation to the trust holder’s death, can save money on estate taxes. Because the trust holder retains no control over the trust, assets owned by the trust won’t be subject to taxes. Creators of irrevocable trusts also won’t be charged income tax, but their heirs will need to report the income on their tax returns. 

As a certified public accountant, William G. Molitor, CPA helps clients in Saint Peters, MO, address complex estate planning situations. Since 1990, this office has provided a variety of financial services to locals, including tax planning and preparation, QuickBooks® consulting, and IRS representation. The office is equipped to help businesses and individuals — and as a family-owned and -operated business, they’re dedicated to supporting local clients no matter their needs. Schedule a consultation with a certified public accountant today by calling (636) 926-0502 or visit the website to review the full list of services.