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Reasons to Establish a Trust (and Being Rich Isn’t One of Them)

When you hear the words, “trust fund,” do you conjure up images of stately mansions and party yachts?

A trust fund - or trust - is actually a great estate planning tool for many people with a wide range of incomes who want to accomplish a specific purpose with their money.

 

Simply put, a trust is just a vehicle used to transfer assets. According to this past article by the The Motley Fool, Trust Funds: They're Not Just for the Rich, and You Might Need One, trusts are especially useful for parents of minor children as well as those who wish to spare their beneficiaries the hassle of going to Court in the event of their incapacity or death.

 

And why would you want to keep your family out of court (known as avoiding probate)?

 

Perhaps you’d like to keep private the details of the assets you are leaving your heirs. Leaving assets via a Will, which must go through probate in order to be activated, makes your estate a matter of public record. A trust is a private document and distributes assets upon your death without the need for probate, preventing your assets from being tied up for a long period of time due to court backlogs and slow proceedings.

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.

 

If you have minor children, you need to create a trust in order to leave your assets to them since minors cannot legally inherit directly. You will want to name a trustee to manage those assets for your children. 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 in case 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.

 

Trusts are also wonderful tools for those who are members of a blended family. If you are remarried and have children from a previous marriage, you can provide for your current spouse while ensuring your assets pass to your children from another marriage using a by-pass trust. With this kind of trust, the assets will pass to your children free of estate tax upon the death of your surviving spouse.

 

As you can see, there are many reasons to create a trust, and being rich isn’t necessarily one of them. You can learn more about how a trust might benefit you and your family by calling us to schedule a Family Wealth Planning Session™, where we can identify the best strategies for you and your family.

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This article is a service of Sky Unlimited Legal Advisory PC, Family Startup 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 at (650) 761-0992 today or book online to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.

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