Yes, You May Need a Trust Even if You Aren’t Rich
When you hear the words “trust fund,” do images of mansions, fancy cars and yachts come to mind? If so, you’re not alone!
However, a trust fund — or trust — is a great estate planning tool for people with a wide range of income levels. A trust can be beneficial for “regular” people who want to accomplish a specific purpose with their money and other assets.
Trusts are legal vehicles for transferring assets in the event of a person’s incapacity or death. It’s especially useful for parents of minor children, along with those who wish to spare their loved ones the hassle of going through the court process known as probate.
Because, no matter what your income level is, you definitely want to keep your family out of court.
Trusts Keep Your Family Out of Court
If something happens to a person without proper estate planning in place, depending on their estate, probate can take months, or even years, to complete. Probate can also be expensive. Once all of a person’s debts, taxes, and court fees have been paid, there might be nothing left for their loved ones to inherit. If any assets are left, family members will likely need to pay hefty attorney’s fees and court costs to claim them.
A lot of people want to keep the details of any assets left to their loved ones private. When assets are left via a will, the will must first go through probate, making an estate a matter of public record. By contrast, a trust keeps details about an estate private. And the assets can be distributed to family members immediately upon your death, without the need for any external court intervention.
Trusts Hold Inheritance for Minors
For people with minor children, a trust can hold assets for those children until they reach adulthood. Minors cannot inherit assets directly so a trust makes perfect sense. If you’re concerned about a trust preventing a minor child from accessing assets if needed, not a worry. A named trustee can manage those assets for your children until they come of age. This means that your child can experience the benefits of a trust via the trustee, but does not have free reign to withdraw the assets on their own.
Trusts Provide for Incapacity
You can even establish a trust for yourself. This is a useful setup in the event you become incapacitated by accident or illness or are unable to manage your own finances. The trust assets would be managed by a trustee of your choice and used to provide for your care. Proper planning prevents the need for the court to appoint a guardian.
Trusts Are Ideal for Blended Families
Trusts can become important tools for blended families. If you are in a second (or more) marriage and have children from a previous relationship, there is an inherent risk of conflict between your spouse and children, even in the best of circumstances. Your children and spouse may have different interests in regards to inheriting your assets. However, a trust helps ensure that both your spouse and children are able to receive the assets you want them to inherit according to your wishes.
I Can Help.
There are many reasons to create a trust, and being rich isn’t necessarily one of them. You can learn more about how a trust can benefit your family by scheduling a Planning and Design Session, where we can identify the planning strategies that make sense for your unique situation.
If you are trying to decide how trust-based estate planning will work for you and your family, set up an appointment with me so we can design a plan that will provide you with the right solution and will work when you need it. You want a plan that will provide the maximum benefit — and the least amount of conflict — for the people you love most.
