Estate planning is an important set of documents that help ensure a person’s wishes and legacy is passed on to future generations. Those who are considering creating an estate plan, may work with a legal professional to see that their rights are being protected and the documents they write are legitimate. One of the biggest elements of any estate plan is writing a trust. Trusts help preserve wealth and distribute them to loved ones in a private manner. With a trust, instructions for how you want your assets to be handled are included. Here are some of the potential benefits of creating your very own trust:
Helps Avoid Probate
Trusts are a powerful way to see that your heirs have prompt access to the wealth you left behind for them. When assets are transferred to beneficiaries through a will, the estate is handled via a process called probate. This is conducted in courts of the state and becomes public knowledge. When a will is put through probate, there are some negative consequences that can follow, including:
- Major Delays: probate can take time, such as up to months or even more than a year to complete. This means that after your passing, loved ones may not receive their share of the wealth until up to around a year later. Also, if you own property in another state, another probate process may be required in that state.
- Extra Costs: the fees associated with probate can be steep, and can quickly add up even if there aren’t conflicts between beneficiaries. Loved ones who are grieving the loss of their loved one won’t want to deal with such a legal proceeding.
- Lack of Privacy: probate is public, so it can be viewed by any person who wants to review it. This level of transparency can create undesired scrutiny or conflicts during the family’s time of grief.
More Control of Asset Distribution
The last thing any person wants, is their legacy to be mishandled after death. By creating a trust, the grantor can have more control over who and how much is given. For instance, a grantor can designate distributions for specific purposes. A grantor can add a stipulation that trustees of the trust must make funds accessible to children or grandchildren, but only for health care or college tuition reasons.
A grantor that is charitable, may want to transfer a portion of their assets to a charity that is important to them. A percentage of the trust balance can be given to the chosen charity throughout the grantor’s lifetime, and then the remaining assigned amount will be given in total once the trust is terminated.
Share Assets with Preferred Family
After a person passes away, sometimes relatives who have not been seen in many years suddenly pop out wanting a portion of the deceased’s assets. A grantor can write a provision in the trust that states certain individuals are not permitted to receive any amount from the trust. In other words, names of family members the grantor wants to ensure doesn’t get a piece of their legacy can be written out of the trust entirely.