Contrary to common belief, the need for a trust is not tied directly to your level of wealth, although wealthy individuals are typically more predisposed to developing a trust, or multiple trusts, for a range of reasons. The need to establish a trust is more generational, based on the basic fact that life has actually simply gotten more complex.
Here are 7 non-tax reasons to develop a trust:
1. Avoiding probate proceedings so that your beneficiaries can rapidly transfer properties of a decedent with personal privacy and at a decreased cost.
2. Protecting beneficiaries from depleting their inheritance by staggering distributions over a variety of years or upon the accomplishment of specific turning points, such as finishing from college.
3. Providing for handicapped beneficiaries, and recipients with compound abuse concerns. A trust can enable a disabled recipient to maintain their eligibility for federal government benefits, and can prevent a beneficiary with drug abuse problems from using their inheritance to sustain their addiction.
4. Control how your assets will be passed down through more youthful generations by guaranteeing your estate is given through your bloodline and not to your in-laws or making it through spouse’s brand-new partner.
5. Creditor protection for your heirs from their financial institutions, or ex-spouses in the event of a divorce.
6. Consolidation of assets during your lifetime, which permits efficient management in the event of a disability and upon your death.
7. Planning for a mixed family, when you remain in a second marriage and have your kids, step-children, and potentially, our A trust can guarantee that your partner and that all of your kids will be looked after after your death.
Many individuals fear they will lose control of their assets by establishing a trust. This is merely not the case, as a lot of trusts do not include using a bank or trust company as a trustee. The majority of customers who create a trust serve as their own trustee during their life times and will name a kid or other household member as their follower trustee.
Ultimately, estate planning and developing a trust has to do with preserving control, so that your assets pass to whom you want, when you want, at the least cost, and in the most efficient manner.