Imagine waking up one day to find that your hard-earned assets and wealth have vanished, caught up in a web of legal entanglements and family disputes. How could this have been prevented? The answer lies in a powerful yet often overlooked estate planning tool: creating a trust to protect assets.
At their core, trusts are a protective fortress for your assets, ensuring their safe distribution according to your wishes. By establishing a trust, you can bypass the probate process, minimize tax liabilities, and maintain privacy in your financial affairs. However, creating the right trust involves more than just a simple signature—it requires expert guidance and a deep understanding of your unique financial landscape.
A trust also provides privacy for the creator and beneficiary(ies). Since trusts are separate from estates, they don’t have to be disclosed during tax season or probated after death (when public records are open for anyone who wants access). This ensures that no one else will know what’s going on inside their finances unless they choose otherwise-and even then, there would only be limited information revealed about them through documents filed with courts rather than revealing everything all at once in one big document like an estate plan would normally do.
To successfully navigate the complexities of trusts and estate planning, it is vital to enlist the help of a seasoned attorney or financial advisor. These professionals possess the knowledge and experience necessary to tailor a trust plan that aligns with your goals, whether revocable or irrevocable, special needs or charitable trusts.
Creating a Trust
Creating a trust is a complicated process that requires the assistance of an attorney or financial advisor. The following are some steps to consider when creating your trust:
Choose your trustee(s) and beneficiaries. A trustee is responsible for managing assets held in trust, while beneficiaries receive distributions from the trust upon its termination or death of the grantor (the person who created it). You can choose anyone as a trustee-your spouse, children, parents, and siblings are common choices-but only certain people can be named as beneficiaries (for example, spouses cannot).
Fund your new entity with cash or other assets such as real estate or securities held by another company owned by you personally instead of this new entity; this ensures that all income generated from those assets will flow directly into them without being taxed at higher rates than if they were held under one umbrella corporation instead (which would happen if we didn’t do this step).
When Should You Establish A Trust?
A trust is a legal arrangement that allows you to manage and protect your assets for the benefit of others. Creating a trust can help ensure that your wishes are carried out after death, so it’s important to establish a trust if:
- You have minor children. If you want to ensure that their inheritance goes where you want it to go rather than being distributed according to state law (which may be more favorable for them), establishing a trust may be helpful.
- You don’t have biological children but do have a spouse or partner who isn’t biologically related to them (and vice versa). If this is the case, establishing an inter vivos revocable living trust can ensure what happens with their assets after death aligns with what both partners want and doesn’t leave any room for argument about who gets what when one partner dies first.
- It also makes sense if there are other reasons someone might need more control over their finances in general; these include health concerns and concerns about future care costs.
To learn more about creating a trust, or any of your other needs, contact us today!
