Property trusts are a type of estate planning tool used to protect the property of an individual. Property trusts can be used to watch over property after an individual passes away. These trusts can help an individual minimize estate and gift taxes, control how assets are distributed, avoid probate, and protect assets from creditors.
Property trusts can become the legal owners of property. There are many different types of trusts that individuals can use to protect assets after death. After forming property trusts, individuals can transfer the ownership of their property into these trusts for later distribution. With this arrangement, a trustee is going to watch over the property for the creator of the trust, or the grantor.
One of the primary advantages of using property trusts is that an individual can minimize estate and gift taxes. Estate taxes are levied on an individual's estate once it reaches a certain value. If the estate is determined to be larger than the exemption, part of the estate will be taken away in taxes. By transferring the assets into an irrevocable trust before death, the assets are removed from an individual's estate. This lowers the value of the estate and eliminates the potential for estate taxes.
Another benefit of using a trust arrangement is that a deceased individual can have some control over how the assets in the trust are distributed to beneficiaries. The grantor is going to put assets into the trust and the trustee is going to manage those assets. The trustee will then distribute the assets according to the wishes of the grantor. If a grantor wanted to restrict how the assets of the estate were distributed, rules could be made to govern the distribution of the assets.
When a property trust is used, the assets within the trust do not have to go through probate court. If an individual uses a will to convey possessions, the will has to go through probate court first. This process can be time-consuming and costly for the beneficiaries of the estate.
Property trusts can also help protect assets of the estate from creditors. If the process is completed correctly, the assets of the estate will be completely removed and put into an irrevocable trust. Creditors of the estate can no longer gain access to those assets once they are within the protection of the property trust.