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Read time:  5 to 7 mins.

Do you own a trust or an estate?

Maybe, you should.

Trust and estate tax planning is something mysterious that most people assume is for the rich.  By definition, a trust is a separate legal entity.

But, what’s the point of creating a “separate legal entity” from yourself?

Creating a separate legal entity allows you to save money.  But, more importantly, a trust allows you to create a legacy that will last forever.  There are 2 major considerations when people consider their legacy.  (1) Money and (2) values are the considerations that everyone thinks about when they look into the future.

“Where is my money going to go?”

“Are my children going to become freeloading losers or are they going to live fruitful lives according to my values?”

A trust will help you save money by avoiding the estate tax.  The maximum estate tax rate is generally 55% (for this year alone, there is no estate tax. So, it’s a good time to die? – joking).  The United States was created because the founders of our nation were fed-up with the upper-class inheriting their wealth, thus keeping the money from freely moving through the economy.  The estate tax forces Americans to return their wealth to our economy.

But, paying the estate tax is voluntary.

It is very easy to plan around the estate tax with a trust as a vehicle.  But, trust and estate planning is very complicated, thus it is always vital that you consult with a professional.

More importantly, a trust allows you to create a legacy that embodies your values, ethics, and ideals.

A trust can be structured so that your assets are only distributed to those you feel are worthy of your legacy.  There are a variety of examples that I’ve seen, but here are a few:

The trust is to distribute a portion of my assets for each of the following conditions.

1. Education – My descendent is to complete a Master’s degree in an accredited institution.  The Master’s program must be of substantial quality, thus waterbasket weaving, origami, and beer pong are not acceptable “programs.”
2. Charity – My descendent is to volunteer yearly for a local charity that directly serves the public.  They must physically serve the needy; the duty cannot be assigned or passed off.  (This condition usually causes a lot of complaints…)
3. Independence – My descendent will receive nothing, unless they are able to fully support themselves (rent, utilities, and etc.) until the age of 35.

These are a few examples of how a trust can retain your values for generations.  Thus, trusts not only help you save money, but they’re also an extension of your person.  It helps you to continue to guide and teach your family.

Conclusion:

Trusts are great for everyone.  They help you save money, but they also help you leave a legacy that’ll stand through the years.