Yes, a trust can absolutely be funded by inheritance, and in many cases, it’s a strategically advantageous way to manage and protect assets received from an estate.
What are the benefits of funding a trust with inherited assets?
Funding a trust with inherited assets provides several key benefits, most notably avoiding probate for those assets. Probate is the legal process of validating a will and distributing assets, which can be time-consuming, costly – often averaging 5-7% of the estate’s value in fees – and public. By directing inherited funds directly into a trust, those assets bypass probate entirely. This is especially beneficial in states like California, where probate fees can be particularly high. Furthermore, a trust provides a structured framework for managing inherited wealth, protecting it from potential creditors, and ensuring its distribution according to the grantor’s wishes. Consider this: approximately 60% of Americans die without a will or trust, leaving their assets subject to state intestacy laws, which may not align with their desires.
Is it better to put inheritance into a revocable or irrevocable trust?
The choice between a revocable and irrevocable trust depends on the individual’s estate planning goals. A revocable trust offers flexibility – the grantor can modify or terminate the trust at any time – but it doesn’t provide asset protection from creditors or estate taxes. An irrevocable trust, however, offers stronger asset protection and potential estate tax benefits, but it comes with less flexibility. For example, if a parent wants to ensure their child receives funds for education but shield those funds from creditors or potential lawsuits, an irrevocable trust designed with specific educational provisions might be ideal. It’s crucial to consult with an estate planning attorney like Steve Bliss to determine the best approach, as the optimal solution varies significantly based on individual circumstances and the size of the estate. Statistically, estates valued over $12.92 million in 2023 are subject to federal estate taxes, making irrevocable trusts a vital tool for tax planning.
What happens if I inherit assets and already have a trust?
If you already have a trust, inheriting assets is relatively straightforward. The assets should be titled in the name of the trust. This often involves completing beneficiary designation forms or retitling accounts and properties. For example, a life insurance policy or retirement account can be designated with the trust as the beneficiary. It’s important to work with the executor of the estate to ensure a smooth transfer. However, one client, Margaret, contacted us after her mother passed, frustrated to learn her inheritance was tied up in probate. Her mother had a will, but hadn’t established a trust to receive the assets. The probate process was dragging on, costing her thousands in legal fees and delaying her ability to access the funds for her children’s education. Had a trust been in place, those assets would have seamlessly transferred, avoiding the probate bottleneck.
Can I use inherited funds to fund a trust *after* my death?
Yes, a “funded trust” can exist as a testamentary trust, created within a will. This means the will directs that assets be transferred into a trust after your death. It’s a useful tool if someone wants to establish a trust for minor children or beneficiaries who may not be ready to manage funds responsibly. A colleague shared a story about a client, Arthur, who wanted to provide for his disabled son. He established a special needs trust within his will, directing his estate to fund it upon his death. This ensured his son would continue to receive care and support without jeopardizing his eligibility for government benefits. It’s a powerful way to ensure long-term care for loved ones. In California, the average cost of long-term care is over $8,000 per month, highlighting the importance of proper planning. Now, imagine a scenario where Sarah receives an unexpected inheritance after her father’s passing. She immediately consults with Steve Bliss, and together they establish a trust to protect and grow those funds. By properly funding the trust, Sarah ensures her inheritance is safeguarded, avoids probate for those assets, and provides for her family’s future financial security.
“Proper estate planning isn’t about death; it’s about life—protecting your loved ones and ensuring your wishes are honored.” – Steve Bliss
<\strong>
About Steve Bliss at Escondido Probate Law:
Escondido Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
- estate planning
- bankruptcy attorney
- wills
- family trust
- irrevocable trust
- living trust
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/oKQi5hQwZ26gkzpe9
>
Address:
Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “What happens to my social media and online accounts when I die?” Or “Can a handwritten will go through probate?” or “Can I name more than one successor trustee? and even: “Is bankruptcy a good idea for small business owners?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.