Estate planning consists of more than just creating a will. In fact, a will often is not sufficient for all your estate needs. When it comes to protecting and distributing your assets, you should consider establishing a trust instead.
A trust differs from a will in that it only covers assets you transfer to the trust, as opposed to all property in your name. Unlike a will, the terms of the trust can take effect while you are still alive. You do not need to be very wealthy to benefit from setting up a trust. Here are only four of many reasons why you should consider it.
1. You avoid the probate process
Wills must go through probate court to determine their validity. This process takes a long time, requires fees and comes with public records. Contested wills increase delays and costs. With a trust, the trustee (the person in charge of administering the trust) has greater control of the manner and timeliness of asset distribution, and the activity remains private.
2. It protects you in the event of incapacitation
If you suddenly become incapable of managing the trust, you can include a provision that allows the trustee to immediately take over. This ensures that the person you want is in control of your affairs, and the court has no need to get involved.
3. You will have less taxes to pay
One of the biggest ways a trust can save you money is by reducing estate taxes. This is generally applicable to those who are married and have a high number of assets.
4. It protects your assets
An irrevocable trust, one you cannot amend, protects assets from creditors. Trusts also allow you to give profits from a family business to family members without letting them get involved in running the company. There are numerous other ways a trust safeguards your assets to guarantee they go where you want them to go.
In addition, you can have more than one trust, each with a different purpose. An estate planning attorney can help you determine how many and which to establish based on your circumstances.