Planning ahead for the inevitable loss of a loved one can ease the emotional burden by reducing the stress of managing the intricate details of an estate. If you have significant assets, concerns about high gift tax rates may already be on your radar. Taking proactive steps to plan the distribution of your estate not only offers peace of mind for you but also spares your grieving loved ones from unnecessary complications.
A real estate trust can be a key solution. It transfers property ownership from your name into the trust, managed by a trustee, providing protection and clear benefits for your heirs. Without such preparations, families often face the harsh realities of probate court, estate taxes, family disputes, and persistent creditors.
If this isn’t the future you envision for yourself or your family, here’s what you need to know about real estate trusts in Lehigh Valley, PA.
Why Trusts Matter
Placing real estate into a trust in Lehigh Valley, PA allows beneficiaries to avoid much of the paperwork and delays associated with probate court during a difficult time. Probate is often a lengthy and costly process, sometimes lasting months or even years, as the court oversees the distribution of assets and ensures any debts owed by the decedent are repaid.
A will provides specific instructions on how the decedent wanted their assets distributed by the trustee. However, without a will, the probate court follows state inheritance laws to determine how property and other assets are divided and transferred to the rightful heirs. Setting up a trust streamlines this process, offering a more efficient and less stressful alternative to probate. The heirs will receive the money at closing when and if the property sells.
The lifetime exclusion for transferring gifts or estates allows individuals to transfer a significant amount of wealth without incurring gift or estate taxes. This exclusion is adjusted annually for cost-of-living increases; in 2021, it was $11.7 million per individual and $23.4 million for married couples. Furthermore, if your spouse passes away and hasn’t fully used their exclusion, the unused portion can transfer to the surviving spouse, effectively increasing their exemption limit.
By placing your home in a trust, you can unlock substantial tax benefits for your heirs. Trusts can reduce gift taxes, with savings ranging from 8% to 40%, which are generally paid by the gifter. The estate tax portion, however, is assessed upon the death of the trust’s creator. Additionally, a trust offers protection for the property against creditors, ensuring that your assets remain secure for your beneficiaries.
One of the most appealing advantages of a real estate trust is the privacy it provides. Unlike the probate process, which is a matter of public record, transferring assets through a trust keeps the details of your estate private. This can help shield your heirs from unnecessary scrutiny and potential disputes, making a trust a practical and secure way to manage the transfer of wealth.
Setting Up a Trust
When considering real estate trusts in Lehigh Valley, PA, it’s essential to understand that there are numerous trust structures available. Carefully evaluating your options is key to selecting the one that best aligns with your estate planning goals. Many people underestimate the value of their estate, but creating a trust offers significant advantages, ensuring your assets can be inherited by your heirs efficiently and according to your wishes.
Start by gathering all important documents and assessing your assets realistically. For example, if you want to provide supplemental income to a family member with special needs, you can establish a special needs trust to meet this objective. Alternatively, if you have a financially irresponsible family member, a spendthrift trust can limit their access to the principal funds while protecting the assets from their creditors.
If you opt for an irrevocable trust, be aware that once assets are transferred into it, the terms are permanent, and you cannot change your mind. While this type of trust ensures your wishes are carried out without second-guessing, it also qualifies your beneficiaries for estate tax exemptions in most cases, making it a powerful estate planning tool that requires careful consideration.
To create a trust, you can choose to handle the process yourself or use an online service, but seeking professional legal counsel is strongly recommended to avoid errors or oversights. You’ll also need to appoint a successor trustee to manage the estate upon your passing. Ensure they understand and are willing to take on this responsibility.
Once the trust documents are finalized, the last step is transferring the deed into the trust. This means the property title will be held by the trust, with you listed as the trustee. The title should include your name as the trustee, along with the date of the trust’s creation, to ensure accuracy and legality.
iBuyLehigh is here to assist if you need to sell a property after the loss of a loved one. We aim to make the process as smooth and stress-free as possible by providing a fair cash offer and ensuring a quick closing, often within just days or weeks, with minimal time and effort required on your part. iBuyLehigh understands this is a difficult time and our experienced professionals are happy to answer any questions or concerns you may have. Send us a message or call iBuyLehigh at (484) 549-0019.