There’s a pervasive myth that trusts are for the wealthy. In fact, trusts are a valuable tool for anyone who wants to protect their assets, avoid probate, provide for their loved ones, and ensure that their wishes are carried out in the event of their death or incapacitation. Potential benefits include:
Avoid probate: A trust is one of the easiest ways to avoid probate, which is often a time-consuming and costly process. Read more: How do I avoid probate in Kansas and Missouri
Gain more control over asset distribution: Trusts also provide flexibility and control over the distribution of your assets. Unlike a will, which requires immediate distribution of assets according to the terms of the will, a trust allows you to specify how and when your assets should be distributed to beneficiaries. This can be especially useful if you have young children, or if you want to provide for someone who is unable to manage their own finances.
For example, say you had $100,000 to leave to your 18 year old son. With a will, that $100,000 would have to be distributed outright to your son when you pass. Conversely, a trust would allow you to hold off on distributing the money to your son until he reaches a specified age, graduates from college, or reaches some other milestone you establish.
Protection from creditors & third parties: A trust allows you to protect assets from creditors and other third parties who might have an interest in funds inherited by a beneficiary. For example, you might have an adult child who is going through a divorce. A trust would allow assets to be withheld until the divorce settlement is final and avoid subjection to a divorce decree.
Reduce taxes: Trusts can also be a useful tool for reducing taxes. Depending on the type of trust you create, you may be able to take advantage of tax benefits that can save you money and maximize the value of your assets. For example, some trusts allow you to transfer assets to your beneficiaries without incurring gift or estate taxes.
Despite the many benefits of trusts, many people are hesitant to create one because they believe it is too expensive or complicated. However, this is not necessarily the case. There are many different types of trusts available, and some of them can be relatively simple and affordable to set up. For example, a simple “revocable living trust” can be created with the help of an attorney, and can be easily modified or even revoked in the future.
By understanding the different types of trusts available and consulting with an attorney, you can determine which type of estate plan is right for your situation and take the necessary steps to create one.
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