Trust Me It's Worth It: Benefits to Setting Up a Trust
A big part of starting your estate plan is choosing the right foundational documents: will vs. trust. To help you make an informed decision, in this article we’ll guide you through the various benefits of a trust. As a reminder, similarly to a will, a trust is a foundational document for estate planning, outlining the distribution of your assets, property, and belongings to beneficiaries. It also specifies guardianship for minors and pets. A trust differs from a will as it operates as a more robust document that offers several advantages. Learn more about the differences between a will and a trust, here. Now let’s dive in!
In general, having a trust may facilitate asset transfer, offer greater control and privacy, and could provide potential tax benefits. A common misconception of estate planning, especially when it comes to trusts, is that you should be wealthy or own many assets to consider one. On the contrary, anyone looking to protect valuable assets such as financial accounts and homes may consider drafting a trust.
1. Probate Avoidance
Probate refers to the legal process carried out in court for distributing a deceased person's assets. Assets held in a trust may bypass the probate process, leading to a faster and more private distribution of those assets to beneficiaries. This helps in avoiding the time-consuming and often expensive probate court proceedings.
2. Privacy Protection
Unlike a will, which becomes a public record during probate, a trust allows for a more private distribution of assets. This confidentiality can be particularly beneficial for people who want to keep their financial matters confidential and can potentially help prevent family disputes over the distribution of assets.
3. Control Over Asset Distribution
Trusts provide a flexible and customizable way to distribute assets. The grantor (creator of the trust) can specify conditions for distribution, such as age milestones.
4. Tax Planning
Certain types of trusts, such as irrevocable trusts, may offer tax benefits. These may include estate tax reduction, gift tax advantages, or income tax planning strategies, depending on the specific structure and purpose of the trust.
5. Asset Protection
Assets may be legally transferred into the trust to provide a layer of protection from creditors and legal judgments. By placing assets in a trust, individuals can shield them from potential claims while still benefiting their chosen heirs.
Now that you’ve gotten familiar with the advantages you may benefit by creating a trust, start yours today, here.
Learn more about what happens once you’ve drafted your trust, here.
Get started with GoodTrust to secure your family’s future, here.