We often meet with individuals who have gone to the trouble of establishing a last will and testament—and they assume this is all they need for their estate plan to be set.
Actually, while having a will is an important start, it’s rarely sufficient. More often than not, it’s also wise to establish a trust, which can be key in preserving your assets and keeping your estate free from any probate issues.
In this post, we’ll take a closer look at why you might wish to establish a trust as part of your estate plan.
The Benefits of Having a Trust
- A trust will help you avoid probate. If you keep your trust funded during your lifetime, then it means those assets will not have to go through the probate court process—which means, in turn, that your beneficiaries and heirs will save some time, money, and hassle.
- A trust helps you plan for incapacity. One of the big roles of estate planning is to prepare for incapacitation—and your trust can help you achieve that goal. Simply put, if you are medically incapacitated for a long period of time, you’ll need some way of keeping your medical bills and other expenses paid. Your successors can tap into the trust fund and use it to cover these costs.
- A trust helps you limit your children’s inheritance. If you have a 16-year-old son who stands to inherit a million dollars, you may not wish him to get the whole thing at once. With a trust, you can ensure that there is a responsible trustee to distribute that inheritance in an accountable manner.
- A trust helps you save beneficiaries from themselves. This is a prickly topic, but in some instances, a beneficiary may have problems with drugs, alcohol, gambling, or simply financial irresponsibility. With a trust, you can see to it that their inheritance is distributed with prudence and wisdom, preventing them from squandering it.
- A trust can offer safeguards against divorce. What happens if one of your beneficiaries goes through a divorce? With a trust, you can ensure that your beneficiary actually keeps their inheritance, rather than all of it being taken by the ex-spouse.
- A trust can help you minimize your tax burden. With a trust fund, you can sometime sidestep burdensome estate taxes, meaning your beneficiaries get more money. This is definitely something you’ll want to address with your estate planning lawyer, who can advise you on matters related to tax planning.
- A trust helps you prevent bad decisions from your spouse. Finally, a trust can put some safeguards in place for how assets are spent. Something that happens all too often is that a surviving spouse blows through their assets on an expensive purchase or a lavish vacation, rather than keeping some money for retirement or for college tuition funds. A trust helps you minimize such risks.
Establish a Trust Today
These are just a few of the ways in which a trust can augment your will and provide you with a truly robust estate plan.
Establishing a trust will require the expert guidance of an estate planning attorney, however, who can help you determine what kind of trust you need, who should serve as trustee, and more.
To speak with Singh Law Firm about setting up a trust, or to ask any questions you may have about the estate planning process, we encourage you to contact us today.
Singh Law Firm is a leading California estate planning practice, and we’d love to help however we can. Connect with us today.