We all want to know that our assets will be distributed the way we planned after our death. When considering this topic, the majority of people would first think of creating a will in which they can specify who gets what and other similar arrangements. But there is another form of legal document that can take care of these things for you – a trust fund.
Although often complex and time-consuming to set, not to mention costly, certain benefits come with this type of estate planning. They are mostly used by wealthy people for these purposes but even though you might not belong to the upper 1%, you should definitely consider it.
Let’s see why setting up a trust fund can be the right move for you.
Eliminating the Probate
The probate is the process by which the judge decides whether the will is valid or not. Something like this will cost your descendants time as well as money in legal fees and will require a lot of paperwork. Until this procedure is finalized, which can take up a year or even two, the inheritance will stay untouched. Also, a will becomes a part of public record, giving complete strangers insight into your family and financial matters.
Trust eliminates all of these problems. It’s a private agreement and doesn’t require probate, meaning your assets will be distributed in a timelier manner. When you set it up, you will have to deal only with your attorney and a trustee. As an Atlanta estate planning lawyer stated, their job is to perfectly encapsulate the desire of their clients in a legal document. On the other hand, a trustee is there to make sure your assets are managed the way to request.
Reducing Estate Taxes
The right to transfer your property after death is taxed by the government. However, possessions that are included in a trust are not always subject to these taxes.
Those which are labeled as irrevocable, cannot be changed after a signed agreement, might bring transfer tax benefits. Contributions to the fund usually incur a gift-tax during your lifetime but after your death and if certain conditions are met, the trust itself might get excluded from the estate tax.
Provides Flexibility
Life is unpredictable and things keep changing so something like a revocable trust will allow you to adapt to new circumstances. It will allow you to add an amendment to the initial document and alter the primary terms of the agreement.
As years pass by, you might have another grandchild and want to add them to the list of the beneficiaries. Or maybe you decide to give part of your wealth to charity. You can also specify the way the funds should be distributed. For example, you can decide that some of your heirs receive monthly payments and not the whole amount at once.
Detailed Distribution of Assets
Some assets are not so easy to split so that’s where a living trust comes in handy. This is especially true in the case of real estate. These types of agreements provide you with more control to determine how that property should be transferred after your death.
You can not only say who inherits the property but also go into details when it comes to who can use it and under which conditions. You can leave clear instructions on whether it can be sold or not and many other things.
Minimizing the Possibility for a Conflict
Fighting over who gets what is not so uncommon after the death of a beloved family member. However, trust can bring the possibility for family arguments to a bare minimum. Why? Well, by being highly customizable and detailed, you have the opportunity to specify who gets which item and the exact amount of money.
With everything being so precisely spelled out, there will be no room to start an argument. In contrast to a will, these types of funds provide you with more control over your estate, especially if you have a complex family situation.
Managing Your Affairs
Trust funds are not only created to take care of your affairs after you pass away. Some people set them up in case they become unable to manage their assets properly due to illness.
You need to name a trustee who will protect you and your property if something like this happens. It’s a much better option than having a court appoint someone to do it for you.
Overall, having a trust fund will make things run faster. It’s a flexible legal document that allows you more control over how assets are divided.
