What is a Trust and Why Would I Need One?
Trusts are commonly thought to be complicated, but in reality trusts are often used to simplify matters. Think of a trust as a bucket. If you own a home, a business, a tract of land, an investment account, and a checking account, all those assets can be put into one bucket—your trust. Why does this matter?
A trust can avoid probate. Since your assets are already inside your trust (your bucket) when you pass away, your trustee can simply distribute the assets as you direct in your trust. With a will, generally you must go through probate before your executor can distribute your assets according to your will. This can be especially helpful if you own real property in another state.
A trust can help plan for a blended family. If you simply leave all of your assets to your spouse when you die, your spouse could end up leaving your assets to their children and not yours, or even a new spouse. A trust is the best way to achieve what we call “remarriage protection” because it allows you to determine who receives the assets should your spouse remarry or predecease another beneficiary.
A trust can help protect your beneficiaries. 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.
A trust is private. 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.
If you are interested in learning more about if a trust is right for you, give us a call today at (832) 761-5107.