Reason #1: Lawsuits
Accidents and unforeseen circumstances happen and your family may be left to cope with the loss or burden caused by debt. Creating a trust to protect your assets is a proactive way to keep your loved ones financially stable.
Reason #2: Death
Some people are concerned about how much they leave to their heirs, but you need to be just as concerned with how much you leave to the government.
While the government hasn’t always been so keen on inheritance, it’s become a revenue stream they’re more and more interested in protecting. Estate taxes were first introduced in the US in 1916 and by the time of their repeal in 1976, they had ensnared roughly 250,000 individuals.
In fact, while we may live in an individualistic society, there are still plenty of incentives to go the “family” route. Various tax laws support family ties, allowing family members to pass on wealth without paying taxes.
But when you die without a trust or a will, you subject your estate to the laws of your state. And they aren’t always in favor of your heirs.
Also, while you may think that putting assets in your trust will make them exempt from estate taxes, it’s important to remember that trusts are not exempt. You have to pay the estate taxes before you can even give your assets to the trust.