You don’t have to be exceptionally wealthy or have a portfolio chock full of assets to incorporate a trust into your estate planning. A trust isn’t a fancy legal situation only for top tier earners. It’s a fiduciary agreement that allows an individual to assign the administration of their estate to a trustee who works on behalf of the family and beneficiaries to ensure the agreement remains intact and followed. In short, it’s your best bet for asset protection and to protect your loved ones. Here are the other benefits of trusts.
A will details a person’s wishes after their death, including who gets what regarding money, belongings, and even assets. However, a will must go through the probate process, which can take months as it works through the probate court system. A trust does not need to go through probate because it’s a private legal contract. This allows for expeditious distribution of assets.
An irrevocable trust has tax advantages for your beneficiaries. Any inheritance within a certain range is subject to a gift tax. However, most inheritance from an irrevocable trust is not, which can save your loved ones thousands of dollars, allowing them to keep what you left for them.
A trust allows you to customize when and how your family inherit money and assets from your estate when you’re gone. Things like reaching a certain age, what the beneficiaries can use the money for, the amount distributed and when, and limited or timed distribution. For example, these parameters can include reaching 18 years old, only using the money for college tuition, and only distributing the wealth in small increments annually.