Reasons to Consider a Trust
One of the most common questions I hear from my clients is “Do I need a will or a trust?” In many cases the choice may simply be one of personal preference. Both documents can help you achieve your estate planning goals. However, there are a few goals that can only be achieved with a trust. Here are a few reasons why a trust may be best for you.
Avoid Probate. A trust does not have to be probated, as long as it is funded properly. Many clients choose a trust simply to avoid the time, hassle, and expense of having to probate later. Unsure what probate is? Check out our blog post: What is Probate and Do I Need It?
Privacy. Because a trust does not have to be probated, what you own will not become pubic record through probate. Additionally, you may choose a trust name that does not contain your name for enhanced lifetime privacy. Your assets can then be owned under your trust name and not your name as an individual. So, other than your beneficiaries no one will know details about your assets.
Out-of-State Property. Owning property in another state can significantly complicate your probate. For that reason, it is usually more economical to choose a trust. It allows you to avoid probate and saves your estate or beneficiaries the time, hassle, and money of probating your out-of-state property.
Creditor Protection. Some types of trusts can provide protection from future creditors and even your beneficiaries’ creditors. If you have a high liability business, profession, or asset this may be a very important consideration. Creditors also can surface during probate, so a trust keeps your beneficiaries secure knowing that they do not have to hand that money over to a creditor laying claim to your estate.
Remarriage Protection. If your spouse remarries after you die, they could possibly end up leaving your assets to their new spouse. A trust is the best way to achieve remarriage protection because it allows you to determine who receives the assets should your spouse remarry or predecease another beneficiary.
Beneficiary Protection. A trust offers protection for beneficiaries who need help managing funds such as those who are young, have a history of being irresponsible with their finances, or struggle with substance abuse. With a trust the beneficiaries can still benefit from the assets, but the trustee has the ability to exercise control and discretion according to a set of guidelines you create.
Asset Management. A trust puts all your assets into one bucket so to speak. If you become disabled or die, your trustee will be able to efficiently assume the role of trustee and begin managing your affairs. Without a trust, assets can get hung up in probate court.
These are just a few of the most common reasons clients choose trusts. Before you make any decision about your estate plan it is always best to speak with your estate planning attorney about your specific circumstances. A trust allows you to draft your own rulebook that supports the strengths of the players in your life.