3 Reasons You May Need A Trust in Arizona

Testators planning their estates or reviewing their documents sometimes need more than just a will. Wills are common testamentary instruments that let people choose their beneficiaries or name a guardian for their minor children.

However, wills only take effect after their authors die. They also typically only facilitate the immediate transfer of property to specific beneficiaries. Testators in a variety of circumstances may decide that drafting a trust could be a smart decision.

There are a variety of estate planning circumstances that might inspire people to establish a trust in addition to or instead of a will. What are some of the scenarios that may make a trust beneficial?

1. Concerns about estate taxes

When people accumulate millions of dollars in property throughout their lives, their estates may be subject to tax after they die. Although Arizona does not collect an estate tax, the federal government does.

Trusts are one of the common solutions employed to minimize estate tax risk. Assets held by a trust do not contribute to the overall value of an estate. Funding a trust with high-value resources can reduce or eliminate estate tax liability.

2. Issues with direct inheritance

Perhaps the testator has family members who have spending issues or substance abuse problems. Maybe they have a loved one with special needs who might lose crucial benefits after receiving an inheritance.

A trust is a way to structure the inheritance that people receive. The trustor can spread the inheritance out over multiple years. They can limit the circumstances in which beneficiaries can access trust resources. They can also designate the secondary beneficiary to receive any assets that remain when the main beneficiaries of the trust die.

3. Desires to limit legal risk

There are numerous ways in which people’s resources could be vulnerable to legal action. A lawsuit against a professional or a divorce could result in someone losing some of their property. Creditor claims brought in civil court could also affect someone’s personal holdings.

Assets used to fund a trust are typically not vulnerable to legal action against the person who funds the trust.  The use of a trust can be very valuable for those who worry about taxes, beneficiary behavior or claims against their personal property.

Creating and funding a trust can be a smart strategy for those preparing for retirement or those hoping to protect their assets at any point during adulthood. A trust is a powerful estate planning instrument that people can use in addition to or instead of a will. Contact us online or call today for a free consultation with Pennington Law, PLLC.