When an investor begins to grow their wealth, it’s crucial to consider what will happen in the future when you are no longer able to make winning investments. What will happen to all of those valuable assets and wealth when you die? With the help of a professional, high-earning investors can create an estate plan that thoroughly outlines what will happen to their wealth when they pass away, including the allocation of assets and how wealth is to be distributed. Trusts have proven to be a highly reliable way to ensure your family and beneficiaries are well taken care of. This article will dive into five potential benefits of setting up a trust in the United States and how Alpen Partners can help you find ease in your estate plan. 

What is a trust? 

Before we can look at some of the great benefits that come with a US trust, let’s cover some of the basics. A trust is a relationship in which a trustor grants a trustee access to hold assets for the benefit of a third person, the beneficiary. In this relationship, the trustor is the investor looking to hold assets, and the third person is the investor’s family or other predetermined beneficiaries. People usually utilize trusts to provide asset protection, ensure the assets are distributed according to the trustor’s wishes, and help individuals avoid or reduce inheritance or estate taxes. Many high net worth individuals incorporate a trust in their estate plan to ensure their assets get equally distributed between children or any other beneficiaries. Also, a trust can be used to gain more control over assets than they would with a standard will. You can set up a trust by working with trusted advisors to determine your goals, choosing a structure, and placing the selected assets into the trust. 

Potential benefits of setting up a trust

Flexibility

When setting up a trust, investors have a lot of flexibility to customize what their estate plan looks like. A trust will allow them to determine specific parameters for each of their assets. This includes making conditions based on the age of the beneficiary or how much money a beneficiary can receive in a single year if they are determined to be someone who needs extra guidance when managing funds. Professionals such as Alpen Partners can walk you through all of the options a trust can offer before an attorney creates the documents needed to set up a trust. 

A Variety of Options

Trusts give investors a variety of options to choose from, depending on their individual goals. Each type of trust offers different benefits. Are you creating the trust to ensure your family is taken care of when you pass away? Are you hoping to take advantage of tax benefits? Determining your goals will help you decide the kind of trust you will form. Here are a few of the options: 

  • Bypass trust– A bypass trust may help married couples take advantage of the federal estate tax exemption amount and then pass down more wealth to their beneficiaries. 
  • Revocable trust- This describes any trust that can be revoked. This means terms can be changed at any time, such as charitable contributions or to include the birth or addition of a new family member. 
  • Irrevocable trust– Irrevocable trusts cannot be revoked, even if some of the assets have been distributed, spent, or no longer exist. 

Tax Benefits

There are several potential tax benefits when utilizing a trust. Many investors and corporations will use a trust because the tax consequences could potentially be lower compared to other tax planning options. When an individual sets up an irrevocable trust and transfers the assets out of their estate, the contributions may be gift tax, but if specific requirements are met, assets can be protected from estate tax when the investor passes away. Also, you can make a yearly annual exclusion gift to this kind of trust without an additional gift tax payment. 

Trusts can be utilized before you pass away.

In some cases, trusts don’t have to be reserved for the death of an investor. If they set up a revocable trust, investors can use their trust if they fall ill or develop a disability. In addition, a trustee can make distributions, pay bills, and even file tax returns on behalf of a trustor who cannot do so. While this may be a difficult topic to discuss, many of our clients prefer to know their families will be taken care of when they can no longer take the reins. 

Avoid Probate

Assets listed in a will have to go through probate before being distributed to beneficiaries, but they can typically avoid this when they are held in a trust. This is because a will is a public record, and a trust is a private agreement. For this reason, many of our clients appreciate the privacy a trust can offer. Plus, by avoiding probate, the process of distributing assets is quicker and easier, which is much appreciated when dealing with the death of a loved one. 

Set up a trust with Alpen Partners

Setting up a trust in the US is one of many ways our clients are fighting potential tax changes and taking advantage of strong asset protection. Investors can legally transfer assets out of reach of future creditors and put them in an impenetrable place, and save a lot on estate and inheritance taxes, which beneficiaries greatly appreciate. Don’t lose what you have worked hard for. Find out if a trust is right for you with the guidance of Alpen Partners. We will examine your current financial situation and goals and implement the perfect asset protection plan for you.