I''ve often been asked over the years, "What is a Trust?" or "Why do people use trusts?" Some people think a trust makes matters really complicated. But in fact, they can be simple. Here are six quick reasons (in reverse order) why people use trusts when developing their estate planning legal program:
(6) Make Their Children's Inheritance Divorce-Proof. If you leave assets the right way in trust for your child, those assets will not get commingled with the assets your child has acquired with their spouse, and, if your child gets divorced, your child will get to keep the inherited "trust" assets.
(5) Avoid Estate Tax. Not as much an issue these days with the $5.49 million exemption, but trusts are still used to remove assets from the taxable estate.
(4) Protect Government Benefits. Sometimes, when a child inherits, and that child is receiving certain government benefits, the inheritance can cause the government benefits to stop. Leaving assets to what is commonly referred to as a "Special Needs Trust," can protect the government benefits that the child is receiving.
(3) Inheritance For Young or Immature Heirs. One of the worst things you can do is leave a lump sum to a child or grandchild who
is not capable of handling an inheritance, either because they are minors and lack legal capacity to inherit, or because of lack of maturity they blow the inheritance.
(2) Protect From Nursing Home Trap. The unwary who wind up in nursing homes are forced to deplete their life savings, and ultimately lose their homes, due to nursing home costs. The timely placing of assets in the right kinds of trust helps protect assets.
(1) Avoid Probate. Assets in your name when you die must flow through the government controlled and court-supervised Succession procedure when you die. By titling your assets in the name of your revocable living trust, you keep your family in control and save considerable time, expense and headache after you die.
While there are many more reasons people use trusts, those are a few common examples. If you want to start a conversation about setting up an estate planning program to protect you and your family, dial 866-491-3884.