Trusts can be a highly valuable component of an estate plan that you might be overlooking. Too often, people focus solely on their will. And while a will is undoubtedly critical, there are several benefits to reinforcing your estate plan with trusts.
A lot happens during a person’s life that could jeopardize their property. Debt collectors and lawsuits could come after your assets. However, property in certain trusts is generally safe from these efforts.
Putting property in a trust can also ensure beneficiaries continue to be eligible for any financial assistance they receive, like disability benefits, without sacrificing their inheritance.
Leaving a charitable legacy
Setting up a trust can also help you protect any charitable legacy you hope to leave. For instance, if you want part of your estate to go to a charity organization or non-profit you support, putting property in a charitable trust sets it aside for that purpose.
These generous efforts can wind up causing costly obstacles if you do not take the time to establish the proper vehicle for transferring money or property.
Receiving a substantial financial gift when someone passes away seems like the beginning of an exciting rags-to-riches story. However thrilling this scenario might be, the fact is that many people prefer a less sensational process.
One common example is when a person wants to prevent a young, impulsive or financially-irresponsible beneficiary from squandering their inheritance. Alternatively, some parties want to use trust payouts to mark specific milestones like finishing college, having a child or turning a particular age.
Setting up trusts with restrictions on payouts can help to control the payments.
Making a difficult time easier for loved ones
Property that someone places in a trust can pass more easily to beneficiaries. There can be less cost associated with transfers, and trust assets do not go through probate. Generally, this is a smoother, faster and more private process.
Losing a loved one is a painful experience; adding in the logistics of probate, and the challenges that come with will contests can make it even more upsetting.
However, creating and funding a trust can make it easier for survivors to navigate this difficult time.