Wondering whether you need a trust? A trust is a great estate planning tool that can help you manage your property and assets. This fiduciary arrangement can go a long way in ensuring your assets are passed down to your beneficiaries according to your wishes in the event of incapacitation or death.
1. Eliminate Or Reduce Estate Tax
Estate tax can reduce your ability to leave a legacy for your loved ones. Depending on the type of trust you choose, the legal entity will provide a lawful way to avoid or reduce estate taxes and other forms of taxation. This will help to save you money and preserve your estate's value. However, to ensure you do not violate the law, consider consulting a tax expert or legal professional before funding your trust.
2. Avoid Probate
This is one of the top reasons to have a trust. Probate proceedings can be lengthy, costly, and stressful. Establishing a trust will help your descendants to avoid this process and access assets more quickly. This is because the assets held in a trust fall outside of your estate, and are therefore not subject to probate. Lastly, a trust is a private document that can be used to keep information relating to your estate private, effectively protecting your beneficiaries.
3. Planning For Incapacity
There is no telling what will happen in the future. This is why it is important to prepare ahead of time for the unexpected. Estate planning can play a critical role in ensuring you and your family members are taken care of in case you become incapacitated.
So why have a trust? When you set up a trust, you will designate a successor trustee. This person will manage your assets, make sure your bills are paid, and your loved ones are protected financially.
4. Protects Your Children
A trust can help you protect your children in several ways. If you have minor children, you can limit their access to the inheritance until they are mature and responsible enough to manage the money. Similarly, you can use an irrevocable trust to make lifetime gifts to your children.
5. Protecting Assets
A trust can be an effective vehicle for ensuring money is used for the intended purposes. This way, money will be available for your beneficiaries' care after you are gone.
The estate planning tool can also help to keep assets out of unwanted hands. This is particularly important if the family structure of a beneficiary changes as a result of events like remarriage or divorce. In short, your spouse and children will get their rightful inheritance.
6. Creditor Protection
Trusts make for a great way to protect assets from lawsuits and creditors. You can arrange your trust in such a way that the assets in the trust cannot be used to pay off debts in case you become subject to predatory lawsuits and creditors. Certain types of trusts also allow you to protect the assets for your heirs.
7. Greater Control Over Your Assets
A trust ensures you have some degree of control over your assets in a way a will cannot. With a trust, you can give instructions for managing your assets as well as how and when they will be distributed. You will also be at liberty to change your trustee and beneficiaries, sell the property, or even revoke the trust. Because trusts are customizable, they can come in handy when it comes to the distribution of complex assets.
A trust can help make estate administration less stressful. To ensure all your transactions are legal and secure, consider working with a qualified trust service provider. At Caldwell Trust, we provide personal, traditional, and independent trust services to enable you to protect your legacy for generations to come. Contact us today to learn more and request our services.