Trusts for Everyone…Not Just the Wealthy
A few months ago I wrote an article for this newsletter about protecting your family by creating an estate plan. Part of an estate plan is a trust. Many people believe that trusts are only for the wealthy, but in reality, most people should have a trust.
The reason why many people believe that trusts are only for the wealthy is because trusts help wealthy people avoid paying estate taxes upon their death. However, trusts serve many other purposes that are helpful to everyone who has a family and/or owns property.
One purpose for a trust is that upon your death, your estate can be managed and distributed without having to go to court. Without a trust, your heirs will be forced to report all of your property to the Court, and the Court will decide who will distribute it. This process is called Probate, and at a minimum will cost $1,500.00, if not thousands of dollars. If you have a trust, you create a document which elects who will manage and distribute your estate and provides for how your property will be distributed.
Another reason trusts help the less-wealthy, is that you can protect your assets from your heir’s creditors. If, for example, your son has racked up a large amount of debt that he does not intend to pay, then if you were to pass away without a trust, his creditors could take your assets to satisfy your son’s debts. However, if your son were to receive his inheritance in a trust, then his creditors would only be able to access that money which the trust distributes to your son, which can be nothing if the trust is set up correctly.
Also, if you have a child or heir who suffers from addiction, then a trust can ensure that your assets are not distributed to your child as long as they are engaging in activities that fuel that addiction. If it becomes apparent to the Trustee that your child is using their inheritance toward an addiction, the Trustee can stop payment to that child until the child recovers from the addiction..
So, avoid costly probate and protect your hard-earned assets by setting up a trust. If you have any questions at all about trusts, call me at 801-668-2490.