Perhaps you’ve done your homework and already created a will and updated the beneficiaries on your insurance policies and financial accounts. If so, congratulations! You’re on the way to a solid estate plan, which can help protect your loved ones’ financial security and ensure that your wishes are carried out correctly in the future. However, there is an additional element of estate planning and a powerful tool: a trust. Whether you set up a living trust (takes effect during your lifetime) or a testamentary trust (takes effect after your death), trusts can make it easier to manage and protect your assets.
If you die with property titled in your name, it may have to go through probate. However, if you set up a family estate planning trust, the trust would be considered the legal owner of the property for title transfer purposes. You could remain in complete control of the property during your life, and your heirs could avoid some costs, delays and complications of probate after your death.
Protect Your Heirs
Many married couples hold their financial assets as joint tenancy with rights of survivorship. But what happens if one spouse dies and the other spouse, who gains outright control of the assets, eventually remarries? The couple’s original heirs might be left out. A family trust can help protect the heirs. It can also prevent the necessity of probate after the death of the surviving spouse.
Prevent Incapacitation Issues
When a property owner or a beneficiary becomes mentally or physically incapacitated, property can get tied up in a legal quagmire. A family trust can help avoid such a situation, with the trustee periodically distributing income from the trust as needed for the care of the beneficiary. In addition to serving as protection if you or a beneficiary becomes incapacitated, a trust can provide for professional management of funds and assets for beneficiaries.
Protect Your Own Interests
Divorce, lawsuits and fraud can wreak havoc on an estate. For example, if you own a house in joint tenancy with a son or daughter, and your child goes through a divorce or is sued, you could potentially lose the home in the settlement. Another example is a senior who falls victim to a con artist’s scam and could be left with nothing. A trust can keep assets safe and provide peace of mind.
An estate planner and an attorney can help you assess your need for certain estate-planning documents.