ACC610DiscussionsWeek 5 - Discussion 2- Trusts

Week 5 - Discussion 2

Greetings, and welcome to the lecture entitled “What Should Your Trust Do for You?” Trust can be interpreted in various ways. A trust is “an arrangement made by will or by an inter vivo (lifetime) declaration by which trustees take title to property for the purpose of protecting or conserving it for the beneficiaries” (Hoffman, Raabe, Smith, Maloney & Young, 2016, Section 20-3). The assets in a trust can be distributed to the beneficiaries in various methods and at varying times, depending on the Trust’s terms. Trust administration is often governed by the trust instrument and the fiduciary laws of the state where the trust instrument was executed (Hoffman, Raabe, Smith, Maloney, & Young, 2016, p. 20-3). The fundamental advantage of establishing a trust is that its assets may pass without going through probate, saving time, money, and hassle, and may help reduce estate taxes.

Since trusts can often skip probate, beneficiaries may be able to receive transferred assets more rapidly than they would if the assets were transferred via bequest. Furthermore, if the Trust is irrevocable, it may not be included in the estate, and consequently, fewer taxes may be owed at death.

Also, your financial legacy will be more secure after your passing. Distributions to beneficiaries and the timing of such distributions can be strictly governed by the trust’s provisionsTrustkeep the trustTrust’sts available during your lifetime; you can create a revocable trust. Even so, you can still choose who will inherit the rest of your estate when you pass away. In addition, a trust can shield an inheritance from the reach of the beneficiary’s creditors or from the hands of heirs who aren’t good with money. Additionally, the probate process is open to public scrutiny, while assets transferred through a trust can often avoid this. The estate’s tax and court costs will go down due to this.

References

Hoffman, W. H., Raabe, W. A., Smith, J. E., Maloney, D. M., & Young, J. C. (2016). South-western federal taxation 2016: Corporations, partnerships, estates and trusts ( 39th ed.). Retrieved from https://www.vitalsource.com/Links to an external site.