Two common ways in which people plan for the disbursement of their property are through a Last Will and Testament and by creating a trust. People often associate trust funds, or trusts, as tools only used by very wealthy people. However, there are advantages to establishing a trust from which people who are not wealthy can benefit.
A trust is a legal document that can be established by a corporation or an individual called the grantor. A trust holds the property or assets of the grantor and keeps them for the beneficiaries. Control of the trust is exercised by the trustee, who can be the grantor, another family member, or even a professional, such as a lawyer.
Trusts can be beneficial for several reasons. Here are seven reasons you should consider establishing a trust:
Trusts Avoid Probate Court
Assets disbursed through a will have to go through the probate process to be verified and distributed according to your wishes. Assets controlled by a trust usually do not. This can help your family avoid having to pay probate fees and often means that your property is disbursed more quickly.
Trusts Offer Flexibility in Distribution
By establishing a trust, the grantor has flexibility in how their assets are distributed. For example, a grantor has the option of disbursing funds to beneficiaries in smaller amounts rather than in one lump sum. This is helpful to beneficiaries who may not be financially savvy. Grantors can also specify how the money can be spent. For example, the money’s use could be limited to food, health care, rent, and other expenses.
Trusts Can Be Used to Pay for Education Costs
Trusts can be set up to cover higher education expenses for the beneficiaries. A college trust fund offers flexibility concerning how and when money is distributed. Oftentimes, a trust will dictate that each child’s full college tuition and expenses be paid, then splits any remaining assets evenly among the children. Other times, a grantor can specify that each child is given the same amount of money, regardless of their college expenses.
Trusts Can Reduce Estate Taxes
There are significant tax planning benefits to creating a trust. By transferring assets into trusts, you can reduce your overall taxable estate. This means that estate taxes paid upon distribution can also be reduced, or in some cases, eliminated.
Trusts Offer Help in Managing Your Affairs
Certain kinds of trusts can be established in such a way that will allow your property to be managed if you become unable to do it yourself. Setting up a revocable trust while you’re alive gives you the flexibility to change the terms of the trust at any time. It also gives you the peace of mind of knowing that if you are unable to manage your affairs, the appointed trustee can carry out your wishes.
Trusts Are Difficult to Contest
If you are concerned that your wishes concerning the disbursement of your property might be contentious, a trust can offer you protection. Although it’s not impossible to contest a trust, the grounds for arguing against its terms are more difficult. A trust can help protect families from difficult legal battles over how their property is distributed.
Trusts Are Private
During the time a will is being settled in probate court, the document becomes a matter of public record. This means anyone can see the terms of your will. Since trusts usually avoid probate court, your instructions about how to distribute your property can often remain private.
The law firm of Merlino & Gonzalez can help you create a trust to care for your Staten Island, NY, family. Reach out to our dedicated attorneys today.