Some people leave behind assets and possessions to others when creating a will while others also use trusts for estate planning. Missouri residents might like to know about some of the reasons for and against using a trust.
Trusts help a benefactor plan for how an estate will be distributed in terms of property and wealth when going to individuals or organizations, and they also help people manage assets while alive. When transferring assets through a trust, the grantor has more control of how the assets are given away. Trusts are only a single part of estate planning and are intended to be paired with other things like a will or power of attorney.
From a capital gains tax standpoint, setting up a trust does not offer benefits for those with less than $11 million worth of assets. This is because trusts are taxed at high rates, so the cost of creating and maintaining a trust would likely outweigh any tax benefits. However, setting up a trust could still be helpful when having goals beyond possible tax breaks.
Benefactors might want control when distributing money for a variety of reasons. Wealthy individuals sometimes stagger payments of an inheritance to children to reduce the likelihood that children will spend the money rashly. Other people may need to set up a trust for a special needs person. This allows parents or loved ones to ensure that someone with special needs is taken care of after they are gone, but this trust does not bar an individual from receiving government assistance.
When thinking about establishing a trust, one should consider what he or she wishes to achieve with a trust. This helps them narrow down the type of trust that may be necessary. A person may also need a financial advisor when weighing options.