When the subject of estate planning comes up, the first thing most people think about is creating a will to distribute their assets to their loved ones when they pass on. However, there is another estate planning tool that most people overlook: a trust.
A trust is a fiduciary agreement between the settlor and the trustee that grants the latter the authority to manage assets in the trust account on behalf of the beneficiaries. Trusts come in a number of forms depending on the settlor’s intentions as well as the beneficiaries’ needs.
Here are some of the reasons why you need to include a trust in your estate plan.
Eliminate potential feuds over your estate
Trusts can ward off potential conflicts between beneficiaries during the probate process. This is because trusts are highly customizable, allowing the settlor to carefully craft the document to address specific needs or situations. Through the trust instrument, the settlor can specify the amount they wish to leave for each beneficiary. For instance, the settlor can specify that X amount of money held in the trust be released to a beneficiary upon attaining a milestone in life such as clearing college or getting married. Besides preventing potential feuds, a trust also gives the settlor control over their assets both in life and in death.
Since they do not go through probate, trusts tend to offer more privacy than wills. Meaning, unlike the will that goes into the probate court’s public records, assets that are held in the trust remain private unless the trust in question is funded by the provisions of the will.
Avoid costly probate
Assets that are held in a trust are controlled by the trust instrument. As such, they do not have to go through the probate process. This, in turn, saves both time and money.
Contrary to what most people think, trusts are not the reserve of the rich and famous. Find out how this estate planning tool can help you protect your interests as well as your loved ones.