From wills to advance directives, Pennsylvanians have many options for creating comprehensive estate plans. Which estate planning tools are right for you and your family may depend on the size of your estate, your tax burden and your personal goals.
For many residents of the Keystone State, creating an irrevocable family trust is an integral part of the estate planning process. With an irrevocable trust, you transfer ownership of your assets to the trust, making them no longer yours. Changing, amending or terminating an irrevocable trust requires the consent of all trust beneficiaries.
Providing for a relative with a disability
If you have an immediate family member who has a disability, creating an irrevocable family trust may give him or her access to disbursements without jeopardizing eligibility for certain types of government benefits. That is because funds in the trust typically do not count as income, your relative may still qualify for Medicaid, Supplemental Security Income or other income-tested public benefits.
Lowering your estate taxes
While tax law is complex, creating an irrevocable family trust may help you avoid some estate taxes. When you form the trust and transfer assets into it, your assets are no longer part of your estate. Because your estate is less valuable, your heirs may have a lower estate tax bill.
Protecting your family’s interests
A major advantage of an irrevocable family trust is the trustee you designate to oversee it. This person complies with recordkeeping and tax obligations. He or she may also protect your family’s interests by closely scrutinizing disbursements from the trust before approving them.
Ultimately, if you worry your kids may squander your wealth, the role of the trustee may put your mind at ease.