Estate Planning involves consideration of a series of long term actions including identifying your Assets, setting up of Trusts, writing of Wills, identifying Trustees, Executors and Guardians, drawing Powers of Attorney, and managing the Estate.
The process of Estate planning determines how an individual’s assets will be preserved, managed, and distributed after death, as also the management of the properties and financial obligations in case of his incapacitation.
Those involved in the Estate or Inheritance planning want to ensure that the wealth is managed and ends up going to the right people. The purpose of planning is to ensure how the inheritance tax liability can be kept to a minimum. This may require drawing a “Will” while the deceased is still alive and/or by making gifts to reduce the size of the taxable estate. Sometimes these measures alone may not be sufficient, or there may be a need to resort to other methods.
Setting up of a Trust
Trust is a likely option to protect the family from a large inheritance tax, delay in distribution of Estate after death, offer other benefits, all of which are part of the Estate Planning process. However, setting up a Trust can be an intricate process itself.
Besides Estate planning and dealing with the assets as per deceased wishes, Trusts can also serve other purposes such as managing tax consequences on Estate and potentially protecting your wealth in later years. The Trust conduit is also used when the beneficiary is in no position to manage the assets themselves, for example, due to their incapacitation or of them being of minor age.
Placement of assets under a Trust also ensures that they are reserved for a particular beneficiary rather than being spent or otherwise disposed of. Trusts are legal arrangements in which a Trustee holds the assets in trust for the benefit of a beneficiary. Trusts are also used to set up for financial care of your children and long-term planning for your dependents.
On the death of the estate owner, his beneficiary can either inherit all the wealth at once on his death, or once when they attain the age of majority, or alternatively they have access to an income stream as the Trust continues to hold the assets and generate the income from it.