Trusts are established to provide legal protection for trust assets, to ensure that those assets are distributed in accordance with the wishes of the trust, and to save time, reduce paperwork, and in some cases avoid or reduce inheritance or inheritance taxes. A trust is traditionally used to minimize wealth taxes and can offer other benefits as part of a well-designed estate plan. Before creating a trust, it is important to contact an estate planning attorney from a law office that specializes in trusts and estates. A living trust is advantageous to your children, grandchildren, or trust beneficiaries, particularly to avoid probate.
If a decedent establishes a trust, the deceased's assets will no longer be brought to court and declared probative after death. The main purpose of a trust is to transfer assets from one person to another. Trusts can have different types of assets such as investment accounts, houses and cars. A common purpose of a trust is to prevent probate, since both irrevocable and revocable trusts prevent the probate process.
Probate is the judicial process that transfers ownership of your assets to your beneficiaries after your death, and many people want to avoid these procedures because they are costly and time-consuming. See Why You Should Avoid Probate Legalization. A trust is a legal vehicle that allows a third party, a trustee, to maintain and direct assets in a trust fund on behalf of a beneficiary. A trust greatly expands your options when it comes to managing your assets, whether you're trying to protect your estate from taxes or pass it on to your children.
The investment information provided in this table is for general informational and educational purposes only and should not be construed as financial or investment advice. The main difference between a will and a trust is that, generally, a will goes through a court process called probate after the owner's death. Legal process of liquidation of an estate during which the validity of the will is proved, the assets of the deceased are collected and accounted for, debts and taxes are paid and the remaining inheritance assets are distributed. In Louisiana, when it comes to taxes, you can keep your family property tax exemption as long as certain conditions apply (you meet a certain purpose under Louisiana law) and the trust allows you to qualify for certain income tax benefits. Your articles, interactive tools and other content are provided to you free of charge, as self-help tools and for informational purposes only.
If long-term care needs arise before then, placing housing in an irrevocable trust may not serve its intended purpose. For most people, the primary purpose of a trust is to protect the home as an irrevocable trust and prevent a creditor from losing the home, including protecting the home's equity from the cost of care in a nursing home during life or after death. We have maintained this reputation for more than four decades by demystifying the financial decision-making process and giving people confidence in their actions. Fidelity will use all information you provide solely for the purpose of sending the email on your behalf. You can always maintain the right to live in the house by using some peculiarities under Louisiana law if that is a purpose of the trust, but if you want to change a primary beneficiary they may have to agree. From the perspective of the creator of a trust, it will be good to know that the income of the trust assets, although taxable, is yours for the rest of your life. The decision to convert a home into an irrevocable trust is usually a good strategy as long as the trust remains intact even if the landlord requests long-term care from Medicaid before the five-year “lookback” period expires. There are other (secondary) purposes of most trusts that are generally not the primary purposes of a trust. It allows you to receive a stream of income for a definite period of time and stipulates that any remainder go to charity.