Estate planning is an excellent way to pass on assets to your children if you are living in North Carolina. Understanding the nuances of an estate plan can be beneficial, especially if you decide to use a trust. You can also specify your wishes on how you should be treated medically if you become incapacitated.
Using a trust with your estate plan can be beneficial
If you’d like to help ensure your assets pass smoothly to your children, using a trust in your estate plan can be helpful. It allows you to take control of distributions and avoid probate court. They are low maintenance and can protect your loved ones in worst-case scenarios when you cannot make decisions on your behalf. Going this route can be highly advantageous if you have complex assets that require proper division.
Maintaining control over your assets
A trust’s structure lets you choose how and when your assets will be distributed. This action can be beneficial if you have young children and want to ensure they don’t receive a significant inheritance at once.
Dividing assets fairly
If you have complex assets, using a trust can help you designate how they are distributed. For example, setting up instructions on how a family business should be handled can be done by using a trust. You can also ensure a vacation home goes to a specific beneficiary.
Knowing the specific assets that should go into a trust is essential
It can be beneficial to put most assets in a trust. Here’s a list of popular financial assets that are often included:
- Stocks and bonds
- Money market, checking and savings accounts
Keeping a retirement account, such as an IRA or 401(k), out of a trust is best. Otherwise, you’ll incur income taxes on the distributions plus the possibility of early withdrawal penalties.
Using a trust in your estate plan can be highly beneficial. However, understanding its pros and cons is essential to protect yourself financially.