Years ago, trusts were predominantly used only by people with a considerable amount of money that they wished to pass down to future generations. Those days are long gone though. Today, trusts can be used by just about anyone and can serve a multitude of purposes. In fact, trusts have evolved to the point where there is a specialized trust for almost every estate planning goal.
One of the most common reasons why anyone chooses to create a trust is because it allows estate assets to pass without going through the probate process. Probate not only holds up estate assets for months, even years, but also costs the estate money. Trusts, however, bypass the probate process altogether.
A trust also gives you eternal control in a manner of speaking. By using your ability to create trust terms, you can continue to exert control over trust assets long after your death. This can be especially useful when you have young beneficiaries or when you are concerned about how well a beneficiary will handle assets. A trust can also be useful in resolving ownership dilemmas when you want to pass down the use of an asset to more than one beneficiary.
Trusts can also help to avoid the often hefty tax obligation that is incurred when a person dies. Trust assets are often not considered part of your estate and therefore are not subject to estate taxes when you die.
Finally, a trust can even protect assets from a beneficiary’s creditors when drafted properly. This benefit allows you to rest easy knowing that your hard earned money or assets will not fall into the hands of a creditor if a beneficiary is less than savvy with his or her money and debts.
The Law Offices of Barton P. Levine is a member of the American Academy of Estate Planning Attorneys.