People are familiar with the financial definition of trust as it relates to estate planning, but many confuse the fiduciary vehicle as being only for the wealthy. In reality, a trust is a useful tool for many people, even those without particularly complicated estates. However, if you are unfamiliar with the term, then you may want to familiarize yourself with the seven primary benefits of using trusts.
1. Avoid Probate Court
For surviving relatives and beneficiaries, probate court is a nightmare. It is a lengthy process, especially if the deceased was not well-prepared or organized. A trust is a wonderful way of speeding up the probate process for your loved ones.
2. Control Spending
While you are alive, you may be supporting some relatives. However, if you want to control frivolous spending and protect your money, a trust is the perfect tool. You can set up limits for daily and monthly spending, ensuring that your estate is safe and secure for years to come.
3. Protect Against Creditors
If you want to provide money for a relative or other beneficiary, you want to make sure they get the money and not their creditors. As the trust is a third-party asset, it does not have ownership directly linked to the beneficiaries, which means a creditor cannot gain access to the funds.
4. Manage Unique Assets
If you want to protect a family home or other assets, a trust is an excellent tool for the job. By placing the item in the trust, you ensure that no one can sell it without gaining permission from the trustee. However, you can leave specific instructions for the asset to remain in the family trust indefinitely.
5. Reduce Taxes
When people leave assets to relatives in their will, those assets usually come with transfer taxes. If the asset is already in a trust, however, these forms of taxes can be avoided, helping your loved ones save time and money,
6. Protect Premarital Assets
You are likely aware that a prenuptial agreement can protect the finances and property of individuals before entering into marriage. A trust is a more secure way of protecting your premarital assets.
7. Provide a Structured Income
A trust can protect your family finances and assets from future events as well. For example, if you pass away, you can provide a structured income for your surviving spouse, which protects the rest of the trust should they ever remarry.
What do you think about forming a trust? If you are still unsure of the process, then contact an attorney, like an estate attorney from Cherry Hill, NJ from Klenk Law, for help.