A trust can be a valuable estate planning tool for passing down your wealth to loved ones. However, many people do not understand what trusts are and what they do. Because of that, they may not take full advantage of their options.
Regardless of how much money you have, you and your loved ones may be able to benefit from a trust if you make it part of your estate plan.
There are many different kinds of trusts available. Therefore, whatever your goals are for your estate after your death, there is a trust plan that can meet them. For example, if you have young children and would like to set up a trust for their benefit, a revocable living trust allows you to keep control of the assets while you are still alive and make changes as needed to reflect your family’s situation.
2. Probate avoidance
The main benefit of creating a trust is that the assets that you put in it are no longer part of your probate estate. This can shorten the estate administration process and entirely avoid the probate process following your death. As a result, your beneficiaries may receive their inheritance more quickly and with less cost than they would otherwise.
When you create a trust, you get to set the terms and conditions by which your beneficiaries can receive their inheritance. For example, if you worry that some may spend their inheritance all at once, you can arrange for them to receive it in small increments. A special needs trust allows you to provide for a disabled loved one without affecting his or her eligibility for government benefits.
A will alone is less flexible than a trust and does not offer the same benefits. A will and a trust can complement each other as parts of your estate plan.