When it comes to working out your trust and estate administration with your estate planning attorney, the earlier you do so, the better. Taking care of such affairs first can give you a sense of freedom and relief even if there is no urgent reason to do so yet.
Since you are likely to think more clearly when not under pressure, planning presents several benefits for you and your beneficiaries. Regardless of the assets involved, estate planning is a gracious and loving legacy to leave your surviving family members. No matter if you have plenty of cash in the bank, a huge house or a large business is immaterial.
With estate planning, you get to decide who gets what, even if it's just a tiny house or a little cash in the bank. At its core, setting up a trust or drafting a will is all about protecting your loved ones.
If tasked to administer an estate or trust (or both), here are some crucial things you need to know about trust and estate administration.
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Wills and trusts are two vital components of any estate plan.
When you create a trust, assets that go into the trust will be removed from the estate. Said assets are managed and distributed through the trustee.
On the other hand, how probate assets (including real property and superannuation) are distributed after the owner's death will be based on the will. The executor will oversee the distribution of the assets to the beneficiaries.
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When grantors create a trust, they name a trustee. The trustee will oversee the management of the trust during and after the lifetime of the grantor.
At the grantor's passing, the trustee administers or distributes the trust assets to the beneficiaries based on the trust document.
The trustee may also get the right to invest and control certain assets on behalf of the beneficiary.
As with executors, a trustee needs to be a legally competent adult. Some states require trustees to post a bond and take an oath to manage a trust.
The executor is tasked to handle the decedent's affairs after death and administers the estate according to the will, except for trusts.
Part of their duty is to also pay any taxes or debts due after the decedent's passing. The remaining properties are distributed to the rightful beneficiaries.
When planning their estate, it is not rare for people to appoint the same person as executors and trustees.
This can be beneficial as it can streamline the estate and trust administration process. It also eliminates any potential conflicts between the two (trustee and executor) aside from minimizing expenses.
However, some people prefer a different trustee and executor. One major downside of having multiple people involved is the huge possibility of misunderstanding, which might delay the settlement process.
If you are named executor or trustee, it means the person has enormous trust in you and in your capacity to manage their properties. However, while it is an honor to be appointed, you are not required to accept if you think you won't be able to handle the responsibility.
Being an executor or trustee is not easy. The task entails a massive responsibility, and complicated family dynamics might make the job even more stressful. That said, you have the option to say no to a direct request or decline in case of appointment by will.
You also have the option to file an appeal in court so you can be excused from taking on the task. The court can name another executor to take your place.
Estate and trust administration is no easy feat, and it can be especially daunting if you have minimal or zero experience. The good news is you don't have to do everything on your own. Trustees can recruit other professionals to help them manage the trust better.
You can also hire a broker, accountant, or appraiser to help you handle financial concerns. Lastly, consider getting a seasoned trust and estate attorney on board so you'll get expert guidance to better navigate the complexities of the law.
Without a customised legal strategy, you put yourself at risk.
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*Note for U.S. citizens: US citizens are limited in their tax reduction possibilities due to FATCA and CFC laws. Opening an offshore company can increase privacy and asset protection, but you can not eliminate your taxes without giving up your citizenship. If you are a US citizen you are obligated to pay taxes on all worldwide income. Read more here about FATCA and CFC laws.
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