For Ohio residents who have assets such as a home, automobile, bank accounts and collectibles, having a will is critical for ensuring distribution to beneficiaries after they pass away. However, if you can make a list of people to share your property upon your death, chances are you can also benefit from having a trust.
According to Fidelity, a trust is a fiduciary arrangement, typically part of an estate plan, that holds assets on your behalf. It can help minimize estate taxes and protect your legacy.
Although there are many types of trusts, a primary distinction is whether they are revocable or irrevocable. A revocable trust may help you transfer assets outside of probate but still allows you to retain control of property within it. Also known as a living trust, it offers flexibility, and you can dissolve it at any time. You retain ownership of the assets you place in it and appoint a trustee who manages the trust after your death.
Irrevocable trusts transfer ownership of your assets out of your estate and into the trust. As a result, the contents are untouchable by probate and not subject to estate taxes. However, you cannot alter them once established. While you may prefer retaining control over your assets while you are alive, there are benefits to these trusts.
Besides minimizing estate taxes, they can protect assets from your creditors. The contents of irrevocable trusts no longer belong to you. As a result, you, debt collectors, cannot petition the court for them. Eligibility for government programs, such as Medicaid, limit the amount of asset you can have. By placing real estate and other property in a trust, you may become eligible for the program more easily.
There are many different types of trusts and you may have more than one as part of your estate plan. Those that meet your needs best depend on your unique circumstances.