A lot of people overlook the effectiveness of trusts when it comes to estate planning. The notion of creating a legal trust can conjure up several images in your mind. Trusts can be a very useful estate planning tool for you and your family if you have a net-worth over $100,000 and meet a few other conditions.
In this article we’re going to look at the benefits of using a trust in the estate planning process. No longer are trusts simply tools for the extremely wealthy. Trusts are becoming an increasingly useful tools for the middle-class as well.
When assets are no longer owned by a single individual, it can increase the level of protection. This also means that you assets in a trust will be protected from creditors as well.
Trusts also help you keep a certain level of control when it comes to how the trust is going to be used. For instance, if you want the funds to go towards your children’s schooling or starting a business then you can specify this.
A Trust Can Help You Protect Your Children
Trusts are useful in a variety of family matters. For instance, a trust can be useful if you need to provide for a child that is incompetent in some way. If you have a child that’s dealing with drug and alcohol problems, and you feel uncomfortable giving them full-on access to your assets, you can specify certain requirements that must be fulfilled before the funds are distributed.
On another note, if you’re concerned that you may become incompetent a trust can be a great option to keep your assets safe. You can even appoint a financial advisor to manage your assets if this situation does arise.
Understanding Corporate Trustees
Corporate trusts help if you have the desire for a professional asset management company to manage your funds.
The process for admitting your will to record, having your assets split up and being supervised by a court official can be very expensive and time consuming. However, if you instead place your assets in a living trust at the time of your death this entire process can be swiftly avoided.
If you have a modest estate, then probate fees might end up impacting your family in a negative way, and can add cumbersome steps that aren’t completely necessary.
The only downside of having a living trust is that elements of your trust such as, your car, checking, or investment accounts may need to be re-titled. However, this process is much cheaper and less time intensive than the alternative.
The Benefits Of Tax-Planning
One of the most crucial benefits of using a trust is tax-planning. Of course, the amount of money you’ll be able to avoid spending on taxes will depend upon the amount of funds in your trust.
The benefits that a trust allows when it comes to taxes are constantly shifting, but overall they offer more protection and can reduce the amount your spouse, children, or other relatives will have to pay.
If you have specific intentions for your money when you die, and want to avoid paying taxes on your assets then a trust might be your best course of action.