A trust is a legal arrangement whereby you give another party the right to manage your property and other assets for the benefit of others. Trusts serve a wide variety of purposes, depending on how they’re established.
A common misconception about trusts is that you must have an estate worth millions of dollars to have one. However, that’s not the case. Below are some of the reasons you should consider establishing a trust.
Do you want your executor to be able to skip the court-controlled probate process that’s necessary when you only have a will? A trust can help you do that since it does not have to pass through probate court. Avoiding probate can also help avoid delays, a lack of privacy and expenses.
Providing for loved ones with special needs
If you have a child or dependent with special needs, a trust is a better way of providing for them than a will. A trust can provide for them without affecting their eligibility for social programs like Medicaid.
Protecting your family’s wealth
A trust can help ensure that your family’s wealth is secure and available for future generations. Usually, assets held in a trust are safe from the beneficiaries’ creditors and cannot be repossessed if they default on debt.
Trusts can be established so that they’re not considered part of a marital estate following a divorce. When managed right, your future generations decades down the line may still enjoy proceeds from a trust you set up now.
Choosing the right trust
As we noted, there are various types of trusts to choose from, depending on your specific needs. Therefore, it is necessary to understand the ideal trust for your needs and plan accordingly.