Reasons Why Living Trusts Make Sense for MostEstate planning is a crucial process where you make important decisions about what happens to your money and belongings when you're no longer here. On this page we'll talk about six good reasons why using something called a "living trust" can be really helpful for this. |
6 Reasons to Have a Living Trust in Massachusetts
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Reason #1: Avoid Probate
When someone passes away, their things usually go through a legal process called probate. This can take a long time and cost a lot of money because it involves court proceedings and legal fees. But with a living trust, you can skip this process for some of your things. It means your stuff goes to the people you want without the complications of probate. This can be especially beneficial for your loved ones who may need access to these assets sooner rather than later. Reason #2: Reduce Estate Taxes If you have a lot of money and property, the government might take a big part of it when you pass away through estate taxes. But in some places, like Massachusetts, if you're married and have more than $2 million, you can use a living trust to save on those taxes. It involves putting $2 million worth of things in a special trust when one spouse passes away, so it's not counted for taxes. By doing this, you can ensure that more of your hard-earned money goes to your heirs instead of the government. Reason #3: Protect a Beneficiary from Overspending Sometimes, you want to leave money or stuff to someone who's not very good at handling it. This could be because they are young and inexperienced, tend to spend too much, or face other challenges. With a living trust, you can create something called a "subtrust" that helps manage and protect their inheritance until they're ready. This subtrust can have specific instructions on how the money or assets should be used, ensuring that it's used wisely and doesn't disappear too quickly. |
Reason #4: You Can Change the Trust's Terms
Living trusts are flexible. You can adjust them during your lifetime to match your changing needs or wishes. Even if you have an "irrevocable" trust, which sounds permanent, there might still be ways to tweak it if needed. This flexibility ensures that your estate plan remains adaptable to life's changes, such as new family members, financial adjustments, or shifting priorities. Reason #5: Protect Future Beneficiaries from Their Creditors A living trust can also protect the people you leave things to from creditors. In simple terms, if they owe money to someone, the trust can make it hard for those creditors to take the stuff you left behind. This protection can be crucial if one of your beneficiaries is facing financial difficulties or legal troubles, ensuring that their inheritance remains intact. Reason #6: Reduce Income Tax with an Irrevocable Trust Taxes can be confusing, but with an irrevocable trust in Massachusetts, there's a way to save on income taxes. It involves making sure the right person pays the taxes based on their income level, which can mean less money going to the government. Essentially, the income generated by the trust is attributed to the beneficiary who receives it, and they are taxed at their individual rate. This can result in tax savings, especially if the beneficiary falls into a lower tax bracket than you do as the grantor. |