You don’t need to be a millionaire to consider setting up a trust. In fact, anyone hoping to make sure their family is taken care of after they’ve passed should consider all the options for estate planning, including trusts.
At Hudkins and O’Neil, we help everyone determine what their best options are, so here’s some information to get you started.
What is a trust?
When you set up a trust, you (the trustor) give someone else (the trustee) the power over your property and assets for the benefit of a third party or parties (your beneficiary or beneficiaries) when you die.
Setting up a trust allows you to control how your assets will be managed very specifically, which is particularly helpful for people caring for family members or who own a business.
Additionally, there are many different types of trusts that allow you to manage what else will happen to your finances, including if you want to dedicate funds to charity, taxes, etc.
How is a trust different from a will?
A will is similar to a trust in some ways, but it’s a document that lays out how you want your assets and property distributed after your death. However, a will is subject to public scrutiny, and assets listed in a will may have to go through probate, which is a long and complicated legal process.
A trust, on the other hand, can be managed much more privately – particularly living trusts, which allow for planning during your lifetime and bypassing the probate process altogether.
These living trusts are the most flexible option, since you can still make changes and take things in and out of the trusts, but you can rest assured that a plan is in place if you pass away or become incapacitated.
Factors to consider
In fact, that’s an important point to consider. Trusts are especially helpful in the case of you developing some sort of disability before you pass away in the sense that the trust is already laid out and explains exactly what your wishes are for your assets and beneficiaries.
But there are other elements to think about when deciding to create a trust, as well:
- Protecting beneficiaries
If any of your beneficiaries are minors, have drug or alcohol problems, or even just poor money management, setting up a trust with a trustee who manages your assets, making sure that your beneficiaries benefit from the assets until the point that they can manage them themselves.
- Marriages, divorce, and second marriages
While of course this won’t be relevant for everyone, revocable living trusts allow for modifiable planning and asset-sharing that will be protected in case of divorce and won’t send everyone to probate when you pass away.
- Funding the trust
Remember – you don’t need to have millions and millions of dollars in order to create a trust. However, you do need to make sure to fund the assets and update the trust when any financial changes occur so that your trust is beneficial to the family members you created it for down the line.
Contact Attorney Candice O’Neil today
Hiring an estate planning attorney gives you someone on your side who can help you figure out what’s best for you. Give us a call today at 603-434-1770 so we can get started preparing your family for the future.