A trust is an excellent estate planning tool that offers many advantages. Trusts are also somewhat misunderstood. Many people assume they are only suitable for the very wealthy. In reality, a trust can be a great option for many people, including those who wish to gift assets to their loved ones.
If you would like to pass assets along to your children, loved ones, or friends, you have several options. Many people choose to distribute assets by making specific bequests in their last will and testament. You can also simply give an asset as a gift outright.
The problem with these options, however, is that you retain very little control over the gift. In cases where a gift is distributed outright during the owner’s lifetime, the owner loses all control over the gift. This is where a trust can help.
Maintaining Control over a Gift
You may be wondering: why would I want to keep control over a gift to my child or loved one? Isn’t the purpose of a gift to give it away?
This is true, however, there are many reasons why you may wish to exercise some control over a bequest. With a trust, you can maintain some measure of control over your assets, including gifts. Furthermore, you can exercise control even after you have passed away. When an asset is placed in a trust, the trust becomes the owner. The terms of the trust dictate how the gift is used, when the beneficiary can access it, and how much the beneficiary can access.
This is incredibly useful for certain types of gifts, including assets used for educational purposes and money set aside for a child with a substance abuse problem. If you are concerned about your adult child using the funds for an undesirable purpose, you can impose certain conditions on your child’s ability to access the money. For example, you may require your child to pass a drug screening or to complete a drug rehabilitation program under the terms of the trust.
Depending on the type of trust you choose, you may also be able to protect the gift from the beneficiary’s creditors, including an ex-spouse in a divorce.
Roseville, California Estate Planning Lawyers
Our lawyers can help you determine if a trust is right for you. Call Yee Law Group Inc., PC today at (916) 599-7297 to speak to an experienced estate planning lawyer about your needs and goals.
This website has been prepared by Yee Law Group Inc., PC for informational purposes only and does not, and is not intended to, constitute legal advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.