When you work on your Washington estate plan, you may cross a will off your to-do list first, and this is wise. A will is an important part of any estate plan and gives you a chance to say where you want your assets to go once you die. However, there are limits to what you might be able to do with a will. In some cases, it may benefit you and your beneficiaries if you establish a trust.
Kiplinger reports that, while different types of trusts exist, these financial agreements allow you to do many different things that a will does not allow you to do. Some of the things you might be able to do through creating a trust appear below.
Shelter assets from estate taxes
Washington has an estate tax, and this tax may cut into how much of your estate your beneficiaries are able to collect. If your estate is valuable enough, you have to pay estate taxes. However, by moving some of your assets into a trust, you are transferring them out of your direct ownership. In doing so, you are reducing the size of your estate, and you may, too, be avoiding the estate tax or reducing your estate tax burden.
Protect beneficiaries’ public benefits eligibility
If you are planning to leave assets or money behind to someone who uses Medicaid, Social Security Disability Insurance or another type of benefits program where they have to prove financial need, leaving them assets in a will may hurt, rather than help them. Leaving assets to these individuals in trusts lets you get around this and not hurt their public benefits eligibility.
These are two examples of the many important things you may be able to do through creating a trust.