While you might generally associate the term “trust fund” with the wealthy, the creation of a trust can be an excellent tool to preserve assets for heirs.
Your family could benefit from a trust when you understand how the contract can safeguard assets.
What is a trust?
The Office of the Montana State Auditor, Commissioner of Securities and Insurance (CSI) describes living trusts as “a convenient and beneficial manner” for transferring property and assets in estate planning. The CSI also encourages individuals to consult with a professional to create a solid plan.
A trust is a legal contract that designates a trustee to manage your assets according to your wishes during your life and after your death.
What are the benefits of creating a trust?
A trust can bring benefits such as:
- Precise direction on the use of your assets: You can create conditions on the use of assets and age attainment provisions.
- Flexibility: A revocable trust allows you to change the contract’s terms as you wish by amending the document. For instance, you may add a new family member or remove someone.
- Structure during disability or illness: If an event incapacitates you, your family will not have to debate how to manage assets.
- Privacy and simplicity: A will goes on public record, and the assets controlled by your will must go through probate for verification and distribution. A trust is private, only involving the executor, trustee and legal advisors.
- Possible tax benefits: Do not consider a trust as an easy way to a tax shelter. However, the details and structure can transfer assets out of your estate, averting estate tax after your death.
You have worked hard for the money and possessions you’ve earned. A trust is an excellent way to preserve valuables for your inheritors.