Trusts are versatile tools and can serve various purposes, from protecting assets to ensuring that they’re distributed according to one’s wishes after passing. They’re created by the grantor, held by the trustee and distributed to the beneficiaries.
An estate plan often includes a will, but trusts offer additional layers of control and protection that a simple will might not provide. Incorporating a trust into an estate plan can have numerous advantages. Let’s look at some of them.
Trusts can bypass the probate process
One of the main attractions of trusts is their ability to avoid probate, which can be lengthy and expensive. By bypassing it, beneficiaries often receive assets more quickly, and there’s a potential for cost savings.
They offer greater control over asset distribution
Trusts allow for more specific stipulations on how and when assets are distributed. For instance, you could set up a trust to dispense funds to a beneficiary once they reach a certain age or achieve a specific milestone, like graduating from college.
Other benefits of trusts
Depending on how they’re set up, trusts can help reduce estate and gift taxes, making them a valuable tool for those with significant assets or large estates. A trust can also protect assets from creditors or legal judgments, ensuring that the beneficiary’s inheritance remains intact.
If there are concerns about a beneficiary’s ability to manage funds responsibly, a trust can dispense assets in smaller amounts or according to specific needs rather than providing a lump sum that might be wasted.
Incorporating trusts into an estate plan offers control, protection and flexibility that other planning tools might not. Having experienced legal guidance can help you determine the type of trust that best suits your needs is crucial.