Estate planning is often viewed as something that is only useful after death. Trusts in particular are considered good for avoiding probate, but the potential of these powerful estate tools is often underrated. People in California can use trusts to ensure that their assets are protected both in life and afterwards.
Avoiding the time-consuming and fee-heavy probate process is a common use for trusts. Inheritances can be protected from creditors and public scrutiny when safely sheltered and passed on via trusts, and with clearly designated beneficiaries, fighting between heirs is usually avoided. However, professionals who might be vulnerable to litigation -- such as doctors -- can also benefit from placing important assets in trusts, which will provide valuable protection.
Creating a trust can also minimize the amount of taxes an estate might owe. This is especially important when a person has a life insurance policy that might otherwise be subject to estate tax. Having the death benefits from a life insurance policy pay into a trust with a designated beneficiary can avoid the costly taxes an estate might otherwise have to pay. During life, taxes can also be minimized through revocable living trusts, which control and manage a property on a person's behalf.
While the importance of estate planning for after death should not be downplayed, it is unwise to ignore the benefits it can provide during life. Trusts are powerful tools that can be used to protect assets, minimize taxes and so much more. These protections are often invaluable to people in California with significant assets that they would like to maintain and protect.
Source: investopedia.com, "5 Benefits of Creating a Trust to Manage Wealth", Kevin Simpson, Nov. 22, 2017