When considering your estate plan, don’t overlook trusts as an option

Living trusts offer many advantages over wills.

When many people think of trusts, they think that they are only for those with millions of dollars in assets. Although it is true that trusts are commonly used among the wealthy, having significant wealth is not a prerequisite to having one. In fact, many people with average incomes can benefit from their advantages.

How a trust works

A trust is an arrangement where your property is managed by someone else for the benefit of yourself, your heirs or another third party. Although there are several types of trusts, one of the most commonly used is an inter vivos or living trust.

A living trust, as the name suggests, is created while you are still alive. In this type of trust, you choose a person (or entity), called the trustee, to manage the assets that are contained within the trust for the benefit of yourself or someone else. You can appoint anyone you choose to act as trustee, including yourself.

Once made, you can alter or change the terms of the trust (i.e. change beneficiaries) at any time. Additionally, you also have the option of canceling it. Upon your death, the assets contained within the trust are transferred to your named beneficiaries according to your specifications in the trust document.

What are the benefits?

Although wills and trusts achieve similar ends, trusts have many benefits that wills do not provide. One of the most important advantages of trusts is that they can save your beneficiaries significant amount of money. Unlike wills, trusts do not need to go through probate, which can be a lengthy and expensive process. Additionally, trusts allow you to avoid estate taxes on your assets, since the assets within the trust are technically no longer in your name. As a result, a trust allows you to transfer more of your property to your beneficiaries in a quicker manner.

In addition to saving money, trusts also give you more control over the distribution of assets. Unlike wills, trusts allow you to control the timing and manner of the distribution. For example, if you have young children, can specify in your trust when they will receive their inheritances. In addition, you can control how your assets are to be used by your beneficiaries. For example, you can direct the trustee to make distributions to your children only for college and other important expenses.

Speak to an attorney

These are only a couple of the many benefits that a trust offers. When you are considering your estate plan, it is in your best interests to consult with an experienced estate planning attorney. An attorney can consider your situation, explain your options and advise you of the best way to carry out your final financial wishes.

Keywords: trusts, estate planning