10 Reasons to Set Up A Trust
Most people are familiar with the purpose and structure of a “Will,” but not many know what a “Trust” is. Trusts are generally more complex due to their legal structure, so they can be challenging to understand. Legally, a trust is an agreement in which a Trustee who holds an asset passes the rights over the asset to an individual or group of beneficiaries. The one who establishes the trust is known as a grantor. A beneficiary is the one for whom the trust holds any property or asset. The controller of the trust is the trustee, who, in some cases, is also a grantor.
Although trusts may seem to concern just the wealthy, that’s not the case. You can set up a trust even if you are not a millionaire, and there are many benefits to setting one up. Trusts will help you manage your property and assets. They will save time, money, and paperwork by distributing your assets according to your will. There are many reasons to set up a Trust, and you should consider them before Estate planning. Estate planning is a formidable task, but a do it yourself estate planning guide can make things easier for you. They will help you through the entire process of creating an Estate Plan, including a Trust if necessary. But before proceeding, you must consider the ways a trust may help you.
Reasons to set up a Trust
There can be plenty of reasons for you to set up a trust, but not everyone needs one. As for some people, a standard will would be a better choice. A Trust can help you to protect your beneficiaries and transfer property effectively. A Trust can be favorable for several reasons. Read through the following reasons to learn more.
- Avoid the Probate Process –
Probate is a legal process to officially recognize a will as a valid public document. It is a time-consuming process during which the assets cannot be accessed. But, a trust can ensure your loved ones avoid this process. It allows your beneficiaries to bypass this process and gain easy access to assets or property without delay. Moreover, it can save you a lot of money since you don’t have to pay probate fees. Hence, setting up a trust will save you time and money.
2. Reduced Estate Taxes –
Setting up a trust is a great way to reduce taxes, and in some cases, you might not have to pay any tax at all. You can choose from different types of trusts available, and almost all of them take tax planning into account.
3. Control Over Assets –
A trust allows you to maintain a certain level of control over your assets and property. In contrast, a simple will does not let you enjoy such control over your assets. You will be the one to decide when and how your assets are distributed.
4. Privacy–
A trust offers greater privacy in contrast to a will. Since a trust does not go through a probe, a public record does not usually exist. Consequently, your assets and your information are kept private.
5. Set For Emergencies –
Most of us never know what’s coming next, and one should always be prepared. Setting up a trust will help you deal with the worst-case scenarios and emergencies safely and effectively. It enables you to protect yourself and your loved ones in times of uncertainty and allows you to ensure that your loved ones are taken care of in any incapacitated event.
6. Fair division of assets –
Some assets might be more difficult to split than others. If you have such assets, a trust is one way to determine the distribution of your complex assets. a Family business being split up is a great example. A Trust can help you divide assets fairly.
7. Flexibility –
Once you set up a revocable trust, you can change the terms of the agreement at any time by amending the document. Hence, you can adapt and be flexible to the changing circumstances of your life. Life is unpredictable, and setting up a revocable trust allows you to adapt and plan accordingly.
8. Professional Wealth Management–
If your beneficiaries have little interest in financial matters and you are worried about managing your sizable assets, setting up a trust comes in handy. By setting up a trust, you can take the help of a professional trustee who would supervise the management of your assets on behalf of the beneficiaries.
9. Resistance Against Contest –
A trust provides greater resistance than a will against legal action from anyone unhappy with the distribution.
10. Pay for Higher Education –
One of the most common reasons people establish a trust fund is to pay for their children’s higher education. Although you might be paying the fee for one child or several, an educational trust helps to specify how and when the money is distributed for educational expenses. In many cases, each child has different educational needs, so you can provide varying amounts depending on each beneficiary’s educational expense.
There are several types of trusts to choose from. You should always choose a plan depending on your circumstances and goals. Working with a competent lawyer or legal team can help you decide and craft a plan that suits you the most. Life is unpredictable, so it’s always better to keep reviewing your goals from time to time. Setting up a revocable trust allows you to amend the trust as needed and helps avoid financial hardship.
It is always a good idea to prepare for unforeseen circumstances. Life happens, and your circumstances evolve with time. Setting up a trust can help you in a lot of ways. Most importantly, it will provide professional wealth management. Moreover, you can plan for any unwanted circumstances just in case. It also allows you to distribute your assets among your beneficiaries fairly. As a result, you can live a satisfying life with a secure future and protected assets.
Last Updated on by Sathi Chakraborty, MSc Biology
