When you hear the words, “trust fund,” do you conjure up images of stately mansions, party yachts, and the quintessential trust fund kid? That’s fair – that used to be me too. But in reality, a trust fund – or trust – is a great estate planning tool for people with a wide range of incomes who want to accomplish a specific purpose with their money.
Simply put, a trust is merely a vehicle to transfer assets. Trusts are useful for parents of minor children as well as those who wish to spare their beneficiaries the hassle of going to court in the event of their incapacity or death.
Three Reasons to Have a Trust:
Reason #1 – Keep things private.
Perhaps you’d like to keep private the details of the assets you are leaving your heirs. Leaving assets via a will that must go through probate makes your estate a matter of public record. A trust is a private document and distributes assets upon your death without the need for probate, which can tie up assets in court.
The court process can take longer and keep your family from getting access to your assets as quickly as they want or need them.
If you have minor children, you should consider creating a trust since minors cannot inherit directly. Even if your children are adults, a trust can help protect assets from creditors, legal judgments, divorce, or even their questionable money management habits.
Reason #2 – Plan for yourself.
You can establish a trust for yourself in case you become incapacitated and cannot manage your own finances at some future time. The trust assets are managed by a successor trustee, which avoids the need for a court-appointed party if you become incapacitated.
Message us to learn how a trust can support you in your time of need, and how to do it right!
Reason #3 – Plan for your blended family.
Trusts are wonderful tools for members of a blended family. If you are remarried and have children from a previous marriage, you can provide for your current spouse while ensuring your assets pass to your children from another marriage using a bypass trust. With this kind of trust, the assets will pass to your children free of estate tax upon the death of your surviving spouse.
Have a blended family? Think about getting a trust in place now to secure their future.
There are many reasons to create a trust and being rich isn’t necessarily one of them. You can learn more about how a trust might benefit you or your family by scheduling a call with us. We can identify the best strategies that are unique and tailored to you and your family.
AB Law, PLLC is a full-service business law and estate planning firm that serves clients throughout Texas. All consultations are free and no question is too silly, ridiculous, or complex. https://calendly.com/ablawpllc www.ab-firm.com