Crafting a will is one way to leave assets to your heirs, but it is not the only one. A trust is another example of a legal tool that you could utilize for this purpose. Essentially, it is an account that holds the assets and you name a trustee to distribute them. You’ll also name a beneficiary to receive these funds.
The process of creating a trust is a bit more complicated than simply listing out the amount of money you want to give your beneficiaries in a will. But there are notable benefits to placing assets in a trust, including avoiding probate.
It can protect assets
There are some ways that trusts can protect assets. For example, if an intended beneficiary struggles with a lot of debt issues, putting the money in a trust may keep creditors from being able to take it if/when they get into trouble. In this way, you’ll better ensure that the money you have earned and left your heir actually stays within your family and doesn’t just go to a company that is owed a debt.
It can give you greater control
Another reason that people will use trusts is the power to stipulate how the money can be used, when it can be distributed, etc. For example, people commonly craft trusts for children or grandchildren to cover the cost of room and board, books and college tuition. This is an especially useful strategy if you are worried that your beneficiary may not use the money on something you would approve of and so you want to retain that control.
It can help if you have minor children
Finally, if your children are still minors, creating a trust gives you a way to leave them money to be distributed at a later date. You don’t necessarily have to give them access as soon as they turn 18. You could even pick 25 or 30 if you wanted to delay those payments a little more.
These are three benefits of many, so make sure you take time to research both how trusts can benefit your goals more broadly and what steps to take if you’d like to utilize a trust as part of your estate plan.
