The words “trust fund” often bring to mind stately mansions and cruising yachts. However, a trust fund, or “trust”, is a tool for many people with a wide range of incomes, not just for the rich.
To put it simply, a trust is just a tool used to transfer assets. Due to their nature, trusts are often favored by parents of minor children as well as those who wish to spare their beneficiaries the hassle of going through probate court in the event of their incapacity or death.
What exactly makes probate a hassle?
Probate makes your will a matter of public record, so all of your assets that you are leaving your heirs no longer private. While going through probate, assets can become tied up and unusable, even your home. The court process can take longer than is necessary and keep your family from getting access to your assets as quickly as they want or need them.
A trust is a private document and distributes assets upon your death without the need for probate, keeping your affairs out of public record and passing assets into your beneficiaries’ hands immediately.
Furthermore, if you have minor children, you need to create a trust in order to leave your assets to them since minors cannot inherit directly. In this case, you will want to name a trustee to manage those assets for your children until they come of age. Even if your children are adults, a trust can help protect assets you leave for them from creditors, legal judgments, divorce, or even their poor money management habits.
You can even establish a trust for yourself with directions on what to do in the case that you become incapacitated and cannot manage your own finances at some future time. The trust assets are managed by a successor trustee, which avoids the need for a court-appointed conservator if you become incapacitated, and your personal desires for handling your incapacity can be provided so that your wishes are met even when you cannot currently express them.
Trusts are also wonderful tools for those who are members of a blended family. If you are remarried with children from a previous relationship, being able to support for your current spouse while also ensuring that your children will inherit some assets using a by-pass trust is crucial. This can avoid large conflicts between your current spouse and your children after your death, and with this kind of trust the assets will pass to your children free of estate tax upon the death of your surviving spouse.
So, now you know that rusts are a tool that can be helpful to people who are not rich. You can learn more about how a trust might benefit you or your family by scheduling a Family Wealth Planning Session™, where we can identify the best strategies that are unique to you and your family.
This article is a service of Levi Alexander, Personal Family Lawyer®. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by calling our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.