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What Are The Advantages Of A Trust

What are the Advantages of a Trust?

What You Should Know!

Trusts and a last will and testament are two components vital to an estate planning process. While most people understand the last testaments and wills, they find understanding a trust a little more challenging. However, you can’t blame them since trusts are more complex than wills and are of different variations.

Choosing the correct type of trust that benefits you can be challenging; however, you could find the right one with proper legal assistance. That aside, a trust provides various benefits, and you should consider it an option before beginning your estate planning process.

We’ve written this article to help you through your estate planning process. We’ll help you create a trust if you decide it’s your best option. Here is why creating a trust could be your best estate planning option.

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  • 30+ Years of Experience in trust, estate, probate, and real estate law.
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  • Expert in Complex Trusts like undue influence and fiduciary disputes.
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by | Oct 23, 2023

Advantages of a trust – Avoid probate court

One reason most people choose estate planning is to ensure the proper distribution of their assets to their beneficiaries. One way you could do this is through a will; however, wills can expose your family to lengthy court cases that may cost them lots of time and emotional distress in probate court.

Trusts help you avoid this process and ensure your beneficiaries get their inheritance on time. Additionally, the probate court has considerable costs like court and attorney fees that your beneficiaries are likely to incur. Using a trust saves your family from emotional distress and extra expenses, providing them with their inheritance.

Reduce estate taxes

Trusts are beneficial since they help reduce estate taxes. Transferring your assets into trusts reduces your overall taxable estates. There are various types of trusts, not all of which take tax planning into account. You can change the terms of revocable trusts after signing them; however, they may not have tax benefits.

Irrevocable trusts are the better option; however, you can’t change the agreement once signed. Transferring your assets to the trust provides tax benefits. For instance, assets placed in a trust and their appreciation over time won’t be taxed if certain conditions are met. Thus, you should stay informed and ask your attorney for advice on how to go about it. Hess-Verdon & Associates focuses on irrevocable trusts. Call 949-706-7300 for a consultation today.

Maintain control of your assets.

Trusts provide specific control over your assets that a will doesn’t offer. A trust’s structure allows the trustor to dictate how and when their assets are distributed. This is vital for trustors that have young children as beneficiaries. For instance, using a trust ensures your children don’t receive all their inheritance in one lump sum.

You can create a trust with life milestones. For instance, you can create a trust and set it out so that your children receive a set amount of funds after graduating high school, college, and marriage. Doing this allows you to properly cater to your children’s needs even when you are gone.

Revocable trusts will help during disability or illness.

A will takes effect only when the individual dies; however, revocable trusts can help your family when you fall ill or are unable to manage your assets. In such cases, your trustee can contribute on your behalf by paying bills and filing tax returns. You can decide on an individual(s) who will act as your trustee (through the trust) to manage your trust.

No one likes to think about death as an eventuality; however, it does happen, and the best way to stay ahead of the curve is to stay prepared. It would be best if you built provisions that safeguard your family and prevent them from making decisions without full knowledge of your wishes in periods of difficulty.

Trusts allow flexibility

Revocable trusts are flexible because trustors can change the trust agreement terms at any time by amending the document. This option provides flexibility during life-changing circumstances. For instance, you could find some charitable cause you are passionate about later on in life and want to be part of the cause.

Provide care for children with special needs

Trusts allow you to care for long-term medical challenges or special needs beneficiaries. Creating a trust provides extra protection after your death and ensures that the beneficiaries who can not care for themselves are cared for. You could set up long-term financial help for the children or get a trust that provides more options on how they can care for them.

Added family protection

There are many feuds involved with divorce and even the death of a spouse. For instance, your spouse could remarry and contest your will leaving your children helpless. Creating a trust helps protect your spouse and children in such incidences. For example, a trust protects your children if your spouse remarries after you die.

Benefits of putting a house in a trust

The BENEFITS OF PUTTING A HOUSE IN A TRUST include most of what is mentioned above plus:

* Protecting your house in the future if you’re incapacitated

* Keeps your financial matters private

* Avoids probate

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Trust vs. a will

The primary difference between trusts and wills is that wills are used after you die, while trusts are used when you are alive and dead. Depending on your wishes, you could use either or both for estate planning. This section helps you determine how you can use a will or trust.

Why Choose a Will

A will is a document that dictates how your assets are distributed to designated heirs and beneficiaries after your death. A will may include instructions directing matters that require your decisions after death, like appointing an executor of the will, directions for your funeral and burial, and guardians for minor children.

You could use a will and direct an executor of the will to create a trust and choose a trustee to hold your assets for the benefit of particular beneficiaries like minor children until they become adults or attain a specified age. The document should be signed and witnessed as required by state law. Additionally, its implementation requires a legal process. Contact Hess-Verdon & Associates to understand better what best suits your needs at 949-706-7300. You can also contact us here.

For instance, a will should be filed with a probate court within your jurisdiction and carried out by a designated executor. The documents in a will are available to the public as records in the probate court that oversees the will execution. The court has jurisdiction over all disputes.

Trusts

Trusts are legal documents directing the transfer of assets from the trustor or guarantor (owner) to the trustee. The document sets terms on how the trustee manages assets and how they distribute them to designated beneficiaries for the final disposition. The trustee is a fiduciary obligated to handle the trust assets according to the trust’s terms. The trustee must do this in the best interest of the trustor’s beneficiaries.

Wills take effect upon death, and trusts take effect when the trustor transfers their assets to the trust. There are various types of trusts, including a living trust and a testamentary trust. Trustors can create a living trust during their lifetime or a testamentary one after death.

Testamentary trusts take effect according to the trustor’s directives. Trusts are used in estate planning to provide asset distribution to the grantor’s heirs. Both trusts have advantages and disadvantages. The decision to use either lies with the owner of the assets.

Protecting your trust

You set up your trust to ensure your money and assets go to your heirs, not your creditors. There are many asset protection trusts, and trustors use them to protect their property for personal, beneficiary, and family benefit.

The primary purpose of this type of trust is to secure trust assets for beneficiaries instead of exposing them to creditors, predators, or divorce. Creating an irrevocable trust transfers property ownership to the trust and allows it to control asset distribution. Additionally, the trustor surrenders their ability to modify the agreement.

You can protect your trust by using third-party asset protection trusts. These trusts ensure that the trustor’s hard-earned money and assets are provided directly for the benefit of their beneficiaries.

You could use:

  • Trusts for minor beneficiaries
  • Trusts for adult beneficiaries
  • Trusts for surviving spouses
  • Trusts for disabled beneficiaries

Such trusts are flexible to fit the trustor’s intended distribution strategy. For instance, you can choose how and when the trust distributes your assets and how much the beneficiaries get. This protects your trust and ensures decisions are made according to your wishes.

Conclusion

Trusts are a good option for individuals that want to cater to their beneficiaries and ensure they get their inheritance. It would help if you prepared for asset protection planning before encountering any liabilities. However, doing this requires good legal counsel that you can only get from established and experienced legal firms. Visit our contact page for more legal advice on how you should proceed with setting up a trust.

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