Trusts for Everyone
There is a idea that trusts only benefit wealthy families and are expensive to set up. In reality, a trust can be a great tool for the average person or family because it simplifies the administrative process in the event of your death. There are many types of trusts to achieve many different goals but, the most common trust used for administrative purposes is a revocable living trust. Such a trust allows the trust creator, or grantor, to specify exactly how the estate will be distributed to your beneficiaries when you die, and in the process can avoid probate and added heartache.
Probate is the court-supervised process in which a will is deemed valid. Probate can tie up property for months, and rack up attorney’s fees and court fees. Among the ways to avoid the probate process is to assign all of your probate assets to the trust and add a pour-over will to include any additional assets in the trust. While you’re still alive, you have control over the trust, can make changes to it if you so choose, or even revoke it entirely.
A revocable trust doesn’t require an additional tax return or other maintenance, aside from updating it for a major life event or change in your circumstances. The trade-off is that because the trust is considered part of your estate it doesn’t offer much in the way of tax benefits or asset protection. For that, you’ll need an irrevocable trust which can be difficult to change or cancel.
You don’t need to have a ultra-high net worth or a substantial amount of assets for a trust to make sense for you and your family. Talk to your trusted advisers to determine if you and your family could benefit from having a trust.