CREATING YOUR LIVING TRUST

A trust is a legal contract that ensures that your assets are managed according to your wishes, throughout your life and beyond. Here are five benefits of adding a trust to your estate planning portfolio.

1. Trusts avoid probate

While assets controlled by you must go through the audit process to be verified and distributed according to your wishes, trust assets usually do not. A will becomes part of the public record, while a trust agreement remains confidential. When you set up a lifetime trust, you only have to agree with your attorney and trustee to execute the contract. It should be noted that you may also state in your will that you wish to establish a trust upon your death; in this example, your estate will go through the will before the trust is established. Privacy is important if you want to keep your family's financial matters out of public view. Also, by avoiding the probate process, trusts are often a quicker and simpler way to distribute your assets when you die. You may even decide that your will should state that any assets that were excluded from a pre-existing trust at the time of your death are transferred to the trust when you die. When dealing with the death of a loved one or the transfer of assets from one person to another, you probably want the change to be as seamless and private as possible. Building a trust can help you achieve both of these goals.

2. Trusts can provide tax benefits

Trusts can be revocable or irrevocable, meaning they may or may not be changed after they are created. An revocable trust gives you the option to amend it after it's signed, but depending on its terms, it may or may not provide tax benefits in the future. However, an irrevocable trust is one that you cannot change, usually once the agreement is signed. Because you are transferring your assets from your property, there may be transfer tax benefits with an irrevocable trust. Contributions you make to the Foundation are usually subject to gift tax requirements for life. However, if certain conditions are met, assets placed in such a trust (and those that gain in value over time) will be protected from estate tax upon your death.

In addition to the initial funding, you can give an annual exclusion gift to an irrevocable trust without having to pay additional gift tax on that contribution each year. The 2023 gift tax exemption rate is $17,000 for individuals or $34,000 for joint filing married couples. Talk to your trust manager and attorney about whether an revocable and/or irrevocable trust is a good estate planning option for you and your family.

3. Trusts offer specific parameters for the use of your assets

Whether you voluntarily establish a lifelong trust and/or create a separate trust agreement, trusts give you the ability to truly customize your estate plan. You can include conditions such as aging provisions or parameters for how assets will be used. For example, you might state that you want the money in a trust to be given to your grandchildren only when they turn 18 and used only for college education. Or you may decide to limit the amount of money a beneficiary can receive from the trust each year who needs extra help managing the money. Trust is a plan for taking care of people you love when you are no longer around or incapable of helping them. Your trust manager can help you talk through different possibilities and scenarios before your attorney prepares the actual trust document for your trust.

4. Revocable trusts can help during illness or disability – not just death

Wills only go into effect when a person passes away, but a revocable trust established during your lifetime can also help your family if you become ill or unable to manage your assets. If that happens, your trustee can make distributions on your behalf, pay bills and even file tax returns for you. You can choose ahead of time who to appoint (through the trust) to manage the assets. Though no one likes to think about these scenarios, building in provisions like these can safeguard your family from having to make decisions without knowing your wishes during difficult times.

5. Trusts allow for flexibility

If you choose to create a revocable trust, you can change the terms of the trust agreement at any time by executing an amendment to the document. This allows you to be adaptable and flexible to life’s changing circumstances. Maybe down the line you become involved in a charitable cause you’re passionate about. Or perhaps you have a new grandchild that you’d like written into the trust. If so, you can add them as future beneficiaries into your trust at that time. Life can be unpredictable, but creating a revocable trust allows you to adapt your estate plans appropriately. So there you have it. When you create a trust, you set up a plan to take care of the people you love when you’re no longer around or lack capacity to assist them. Not only can a trust simplify the process of asset distribution, it can also help you leave a lasting financial legacy.

* You—not a court—decide who gets your assets, and ensure they are divided according to Islam.

* You—not a court—decide who cares for your children.

* You—not a court—decide who manages the financial affairs of your minor children.

* You—not a court—decide who manages the affairs of your estate.

* You—not a court—decide your burial rites, If you do not want state law to decide who gets your estate, use the partner of Global Finance Platform programs to prepare your own custom-tailored state-specific, legally binding, Shari'a-compliant estate plan.

Your Islamic Will, like a secular will, covers all the assets that make up your estate. When you die, the interests you have in all your property - real and moveable - become part of your estate, and will be distributed to your Islamic heirs in your Islamic Will. However, your Will does not cover assets that are transferred to third parties by right of survivorship or because of pre-selected beneficiaries, such as:

* Real estate owned with a right of survivorship;

* Bank accounts with a right of survivorship;

* Retirement accounts with a pre-selected survivor beneficiary; or

* Life insurance with a pre-selected survivor beneficiary.

When you pass away, all assets owned individually and assets with the estate selected to be the beneficiary would be distributed according to your Islamic Will. All retirement accounts, insurance proceeds, and assets owned with a right of survivorship will be distributed to the pre-selected beneficiary outside of your estate.

An Islamic will covers everything that a secular will covers, including:

* Appointing an executor to distribute your estate and manage your affairs after death;

* Appointing a guardian to care for your children and manage their inheritance until adulthood;

* Leaving money and/or property from your estate to other relatives or to charitable organizations; and

* Specifying any debts to be paid at your death. However, unlike a secular will, an Islamic will also includes Shari'a-complaint solutions to managing your estate after death, including:

* Telling the world you have selected your burial rites according to Islam;

* Outlining your wishes regarding autopsy that are permissible under the Shari'a;

* Specifying moral and religious obligations to be paid at your death;

* Providing permissible, recommended, and obligatory bequests up to one-third of the estate in the aggregate; and, most importantly

* Dividing your assets according to Shari'a inheritance rules. If you want your estate to be divided according to Shari'a inheritance rules, use our software to prepare your own custom-tailored state-specific, legally binding, Shari'a-compliant estate plan.

A joint will that is also called a “mirror will,” “mutual will,” or “reciprocal will” is a will that may be executed by a married couple to ensure that their property is disposed of identically at time of death. In a standard joint will, the wife and husband make identical wills that provide when one spouse passes away, the surviving spouse receives everything, and when both of them pass away, the estate would be left to their children or other beneficiaries. Except for your spouse, American law allows you to leave your estate to anyone, and for the most part you are free to disinherit any family member (with a few exceptions in some states).

The Sharī‘a, on the other hand, is a fixed share system. You have restrictions on the distribution of your estate. The Sharī‘a has certain gender-specific obligations and the inheritance rights of each spouse's beneficiaries are different. For example, the parents of one spouse are not the legal heirs of the other spouse. The inheritance distribution of each spouse is also different. For these reasons, the Sharī‘a does not permit a person to leave his entire estate to the surviving spouse. For this fundamental reason, a joint will would violate the requirements of the Sharī‘a.