When people think about their lives, they may think about their relationships and the people they love. For many people, thinking about their wealth is not the first thing that comes to mind when they think about leaving this world. While thinking about one’s own death can be difficult, it is important for individuals in Michigan to think about what will happen to their assets and their family should they pass away. People might like to think that these issues will work themselves out. However, complex estate planning often needs to be done in order for people to protect themselves and their families.
In particular, when it comes to protecting their assets, individuals need to know how to best limit their tax liability. No one likes to pay taxes. However, tax liability does not end when a person dies. The person’s estate will be required to pay a variety of taxes if preventative measures are not taken.
For some, the use of the trusts can help to limit a person’s tax liability. In particular, an irrevocable trust can be particularly important in minimizing tax liability of the estate. With an irrevocable trust, the grantor no longer owns the property place in the trust. Instead, the trust owns the property. Then, the individual benefits from the trust property during the person’s life.
Certain trusts – such as a qualified personal residence trust – can help to reduce the estate’s assets before a person’s death. With the qualified personal residence trust, for example, a person’s house is placed in a trust. Other trusts that may be used for estate planning and tax planning purposes include a bypass trust, irrevocable life insurance trust or intentionally defective grantor trust.
These trusts all work in different ways to help individuals avoid tax liability in certain situations. With the help of an attorney, individuals can understand what type of trust will work best in their particular situation to avoid as much tax liability as possible. With the right planning, people can protect their assets and their family in the future.