There are so many things to consider when making future plans, especially when deciding how to provide for your loved ones should you no longer be there. Ensuring that estate assets will be safe and easily accessible when the time is right can be challenging. Residents of Nevada and elsewhere will often set up a trust so that they can avoid a lengthy probate process and taxes and have more control over how assets are divided.
In addition to creating a will and a power of attorney, there are many benefits to having a trust. Although people often funnel cash, stocks, securities, or certificates of deposit into the trust, it is also possible to fund it with life insurance. If you live in Las Vegas, you may wish to explore creative estate plan options to find the best plan for their family’s needs.
The different kinds of trusts
A trust is a means of transferring estate assets by creating a fiduciary arrangement between the trustor, or creator of the trust, and a designated trustee. In a formal document the trustor gives the trustee the right to make decisions concerning the distribution of trust funds that have been placed in the trust, either during the grantor’s lifetime or immediately following their death. These funds are often held on behalf of named beneficiaries.
The two basic types of trusts are:
- Revocable, or living trusts
- Irrevocable trusts
A revocable trust may be altered, which is extremely useful for avoiding probate as well as for other purposes. The trustor cannot alter an irrevocable trust, but it is a valuable tool for avoiding estate taxes.
Funding the trust with life insurance
For parents with young children who do not yet have much accumulated wealth, providing for their family should one or both suddenly no longer be there is a priority. People often fund a trust with life insurance, naming each other as primary beneficiaries with the trust being the contingent beneficiary.
In this way, if the parents were to die unexpectedly, the funds will be available immediately, tax-free and available for the trustee to access on behalf of the children. This is more practical than just naming the children on the policy, as then they would not be able to access funds until they reached the age of majority.
One of the least expensive policies is term life insurance, which is an affordable way for families to build a financial future. For those who want a longer funding source for the trust, guaranteed universal life insurance may be a more suitable option. It is important when examining estate planning options to discover what is appropriate for your unique circumstances.