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What Are the Benefits of a Trust in Retirement and Estate Planning

In this article, we will discuss what trusts are, some of the various types of trusts you can use, and how trusts can save you money on estate taxes. If you want to take full advantage of what a trust can do for you and your heirs, it’s important to partner with a trusted advisor for estate planning services. Put your estate in the hands of your heirs, not probate court. 

What Is a Trust?

A trust provides legal protection for your assets and helps you distribute them to your heirs or beneficiaries after you pass away. You can use trusts to save money on taxes, expedite the estate settlement process, and ensure that your wishes are laid out clearly.

A retirement trust allows you to use the trust as a beneficiary for your retirement accounts and personal assets. Your assets become the property of the trust once you pass away, and can help provide tax savings for your estate and heirs.

 Additionally, setting up a trust can speed up the distribution of your estate and may prevent your estate from going through the probate process. Estates that go through probate may take months or years to settle, depending on where you live. 

Benefits of a Trust

Trusts help you retain control of your assets and avoid confusion and conflict during the estate settlement process. Married couples can use the trust to protect the surviving spouse’s estate or to set money aside for future generations.

Some of the other benefits of trusts include:

  • Avoiding probate court and getting money to your heirs faster
  • Your final wishes remain private
  • Reduced estate and gift taxes
  • Protects the estate by establishing conditions for distributing assets, including personal property

Talk with an experienced advisor, such as those available at TPI Group, about how to incorporate trusts in your tax and estate planning while protecting your surviving spouse. By seeking professional advice, you can set up a trust in accordance with state law that will allow you to enhance your retirement planning and provide for one or more beneficiaries.

Types of Trusts for Retirement and Estate Planning

Revocable vs. Irrevocable Trusts

A revocable living trust allows you to assign a trustee and beneficiary to your estate. When you pass away, your trustee will manage and distribute the trust property in accordance with your will. Also, if you become incapacitated, the trustee takes over the management of your trust.

The IRS will consider assets of the trust as part of your taxable estate if you choose a revocable trust. Therefore, many people turn to an irrevocable trust as part of their estate planning strategy. With an irrevocable trust, you cannot change the trust once it has been executed. The assets are placed in the trust and removed from your estate. When you die, the assets in the trust are not subject to estate taxes since they are no longer part of your estate.

Generation-Skipping Trust

If you want to protect multiple generations, you can use a generation-skipping trust, as long as it’s permitted in the state in which you live. This allows you to transfer tax exemptions to grandchildren and other remote descendants and to protect your wealth for generations to come.

Credit-Shelter Trust

A credit shelter trust is a great tool for blended families. You can also use it to protect your heirs if your spouse remarries.

Which Trust Should You Choose?

You should discuss other types of trusts with your financial advisor to find out what strategy would work best for you and your beneficiaries. For example, a charitable remainder trust will allow you to receive a fixed income from the trust while saving money on income taxes. Your trustee can sell property in the trust and not pay income taxes but non-charitable beneficiaries may be subject to federal taxes.

An irrevocable life insurance trust fund (ILIT) allows you to set up a term or permanent life insurance policy. You can use the ILIT to distribute the life insurance benefit after you die. It minimizes estate taxes, protects your assets, and facilitates legacy planning.

Where Can You Find a Trusted Financial Advisor?


There are a number of different types of trusts that may better suit your situation. Therefore, it’s important to give your financial advisor or estate planning attorney as much information as possible to save on estate tax and income taxes.

Find a trusted advisor with experience in estate planning and tax planning, like the experienced professionals at TPI Group. Contact us today to learn more about how to use trust as part of your estate planning strategy.