This blog has previously talked about different trust types and the way they can be used as tools to meet certain estate planning goals. This week, let's look at why a trust may be a good idea for some individuals who want to have a bit more control over how their assets are distributed after their deaths.
First and foremost, trusts, for the most part, keep assets out of the probate process. While any last will and testament will generally have to be submitted to the probate court, and assets to be distributed thereby will be subject to public scrutiny, in most situations, property held in trust will remain private. Further, probate can be lengthy and expensive. Establishing a trust may help avoid such delays and costs. Another reason a trust may be appropriate is if the grantor, the person who creates the trust, wishes to put certain conditions on the distribution of the property. For example, let's say rather than handing over an entire amount of inheritance to a more immature family member, the grantor wants to give it to him or her in three different chunks at different times, to prevent the squandering of the wealth all at once. Or, perhaps the grantor wishes to place an incentive on education. He or she may be able to use a trust to distribute inheritance only if an heir graduates college.
A connected, but slightly different use for a trust might be to ensure a spouse is provided for, but still attempt to give a portion of the inheritance to a child from a previous marriage. In such cases, leaving everything to the newer spouse has no guarantees that he or she will give it to another person's child when the spouse dies. Also trusts can often help minimize the payment of inheritance taxes for very large estates. Certain trusts may also allow a person of one's choosing to manage one's assets, the "trustee", in the event that one is no longer able to do so through accident or illness.
There are many kinds of trusts, some simple, some extremely complex. In many cases, trusts can be tailored to the specific needs of the grantors. If you would like more information about trusts and how they may be able to benefit your estate plan, please consider looking at our web page on wills and trusts.