There are many reasons to create a living trust, making this property distribution technique a popular choice when creating an estate plan. A living trust allows for the management of your assets during your lifetime and the transfer of those assets pursuant to the terms of the trust without a court-supervised probate proceeding.
Other advantages of trusts include:
- Easier, more efficient administration of your estate
- Maintain assets in trust until your beneficiaries attain certain ages that you want them to inherit
- Creditor protection from beneficiaries’ creditors, spouses, and divorce proceedings
- Prevents probate court jurisdiction when a minor inherits assets
- Can be changed or revoked at any time
- Tax planning to reduce or eliminate state and federal estate taxes
Life Insurance Trusts
Generally, benefits paid under life insurance policies would be included as part of the deceased's taxable estate. In order to reduce the value of your estate you should consider creating an irrevocable life insurance trust. The life insurance trust would be the owner and beneficiary of the life insurance policy. This would remove the value of the policy from your gross taxable estate.