While some estates do fine with a typical will, large estates or family estates may find more value in protecting assets through trusts. A trust is a fiduciary tool that protects assets for beneficiaries of an estate. While often viewed as a tool for the incredibly wealthy, there is a growing awareness among people of all socioeconomic backgrounds as to the benefits of trust funds and the benefits over traditional wills.
- Avoid Probate
The most significant benefit for many people is the avoidance of probate. Probate is the process of authenticating a decedent’s will and distributing assets, but it can be time-consuming and expensive. Therefore, trusts that make funds and assets immediately accessible to the designated beneficiary offer a more desirable outcome.
- Protect Beneficiaries from Creditors
A common worry of those writing wills is that the creditors of their loved one’s will garnish the desired inheritance. While that is a possibility with wills, it is not possible with a trust. The ownership of the estate remains with the trust and not with the beneficiary, but the recipient can access their inheritance under the stipulations of the fund. However, if the beneficiary is named as a trustee, then they can manage their inheritance as they wish.
- Protect Needs-Based Governmental Benefits
Also, if you have a disabled child or grandchild, then a trust can protect their government benefits. If you do not have a trust and only stipulate the beneficiary in your will, then your loved one may lose their benefits or have to go through the complicated process of forming the trust after your death.
- Limit Estate Taxes
Also, a will alone subjects all of a decedent’s assets to estate tax. Meaning that money you think you are leaving to loved ones is actually reduced heavily through final estate taxes. A trust can protect funds and limit estate taxes in the future so that what you think you are leaving loved ones is the reality.
- Distribute Assets to Minors
Last, if you name any beneficiaries in a will who are minors, then you are opening an administrative nightmare for your surviving family because a court will have to appoint a conservator to receive the funds for your child. A trust, on the other hand, handles the administration of assets to beneficiaries, which means the court does not need to be involved.
Trusts are an essential document for protecting the inheritances and beneficiaries of your estate. Therefore, contact an estate lawyer in Allentown, PA and discuss how a trust can be set up for your specific needs and desires.
Thanks to Klenk Law for their insight into estate planning and benefits of a trust.