There are many myths that surround estate planning, especially one of the most valuable tools, which are trusts. Some people believe that trusts are only for those with seven-figure incomes and huge stores of cash assets. In reality, trusts are a useful tool for families with average incomes and homes. A trust can offer a host of potential benefits for creating a workable and flexible estate plan.
In addition to offering decreased tax liabilities, trusts give you much more control over how your assets get handled after your death. There are many kinds of assets, which allow you different kinds of benefits, such as the ability to fund them on your death with the benefits tied to your life insurance policy. Whether you already have an estate plan or you're getting to create your first one, it may be time to consider the value of a trust.
Trusts give you more control over your legacy
Even if your family won't inherit millions, it's still a great idea to carefully plan who receives which assets and under what circumstances. Placing assets in a trust can help ensure that only the person you want to leave them to receives them. It can also help by allowing for the creation of limitations on how assets get used, how much a trustee can disburse in any given year and many other factors.
If you want to provide for the care of your specials needs child or allow him or her to remain in your home after you die, a special needs trust may be the best solution. You can create restrictions on how the assets from your trust get used or even name someone as trustee whom you know will take good care of your child.
Trusts let you protect heirs from themselves
A trust is also a great option if you have a child or grandchild struggling with addiction. Whether the issue is opiate painkillers or gambling, and addicted heir could easily blow through all of the resources you allocate for him or her in a horrifically short period of time.
A trust can limit how much they can use at any one time and can even require that those funds only go toward costs like housing or continued education. You can even require that heirs be addiction-free to access funds, as some people have done in the past.
Trusts can even help your estate avoid probate in some cases
Trusts can give your family a better idea of what to expect after you pass on. By communicating with your family members about the trust, its requirements and your intentions, you can eliminate much of the risk for challenges to your estate plan down the road.
If family members understand what you plan to do and why you are doing it, they will be less likely to bring a challenge against your estate plan in probate court.
Naming multiple people to serve as trustees can also cut down potential conflicts. With several heirs there to serve as a system of checks and balances, everyone in your family can feel more secure about the administration of your estate.