Although often associated with the rich and famous, a trust can be a useful planning tool for just about everyone. A well crafted trust may help you with things such as: managing your assets should you become disabled or incompetent; help to minimize estate taxes; provide for a child who struggles with managing their own money; or protecting your estate from lawsuits and creditors. And more importantly, a trust has the additional benefit of allowing your beneficiaries to gain access to these assets quickly while avoiding the costly and time consuming process called probate. (See our blog on Reasons to Avoid Probate)
A trust is a legal document that spells out how you want your property managed, and upon your passing, distributed to your beneficiaries. Trusts can be arranged in many different ways with different rules as to exactly how and when the assets pass to your beneficiaries. Whether your wishes are simple or complex, a trust allows for a great degree of flexibility.
Some key features of a Trust include:
• Control of your assets – You create the rules and decide which assets you want held in the trust, such as real estate, money and/or personal property. You might put your home in a trust while reserving lifetime usage for you and your spouse. After both your deaths, the house automatically passes to the named beneficiaries while avoiding probate.
• Privacy – A trust is a private document and will maintain the anonymity of beneficiaries and assets of an estate. Assets not held in trust often have to pass to your heirs through the probate court, a very public process. By going through probate, any person or creditor can see what is in your estate and make a claim against any potential heir distribution. A well constructed trust can help ensure your assets go where you want, and not to one of your heir’s creditors or to their ex-spouse.
• Avoidance of probate – Probate is a time consuming, expensive public process that will delay any inheritance to a loved one. In Massachusetts, a probate filing must stay open for at least one year to allow any creditor to make a claim. Creating a trust allows your assets to pass immediately to your loved ones and outside of probate.
• Creating a legacy – Placing and managing assets in trust can benefit another long after your passing. A grandparent may wish to fund a trust to pay for their grandchildren’s college education. When the grandchild reaches college age, the funds will be there for the intended use.
• If you become disabled, a trust allows for the continuity in the management of your assets and care. Depending on the type of trust, assets will continue to be available for your use and benefit, should you become physically or mentally incapable of managing your own affairs.
With many different purposes, a trust is not just for the “rich and famous”, and can be a great benefit to your family. Trusts can make it easier for your loved ones to manage your assets and ensure that they are used for the purposes you identify, long after you pass away.
For more information on trusts, see our blog “What are the Different Types of Trusts”, check out our video on Trusts, or call our office to speak with one of our experienced attorneys who can help you decide which type of trust is right for you.