Do you think that trusts are only useful for wealthy people? While it is true that many people with significant estates have trusts to protect and pass on their wealth, there are a number of reasons why trusts can also be useful for middle-class families. Here are seven of them:
1. Control distribution of assets. Just like you would not want to hand over your car keys to a child who had no driver training, you would not want to hand over all your assets to a teenager either. But without a trust, if both parents die at the same time the children would receive all the assets in their inheritance upon their 18th birthdays. A trust allows you to specify how and when you want your children to inherit, and you can set up a distribution schedule that gives a lesser portion at eighteen and reserves the rest for when the children are older (and likely wiser).
2. Protect assets from creditors. Placing an inheritance in a trust protects those assets from the creditors that your heirs or their spouses may have.
3. Protect inheritance from spendthrift heirs. Not everyone is good with money. If that describes one of your heirs, you can use a trust to ensure that the assets are not frittered away with spendthrift behavior.
4. Protect inheritance for children of prior marriage. You can use a trust to both provide for your current spouse and to leave an inheritance to children from a previous marriage at the same time.
5. Provide for a special needs heir. Leaving assets outright to a disabled heir with special needs could disqualify them from receiving important government benefits they need for their care. Leaving them assets in a special needs trust eliminates this potential risk.
6. Avoid probate. Assets can pass to heirs without going through the court process of probate by using a trust, saving beneficiaries considerable time and expense. Probate is a costly, public and often lengthy court process that you can keep your family from having to deal with.
7. Protect privacy. Once a will is entered into probate, it becomes public, as well as all the rest of the documents in the probate including the inventory of the estate, creditor claims, and distributions to heirs; a trust is a private document that will protect your family’s privacy.
If you would like more information about protecting your loved ones, call our office at (612) 206-3701 or fill out our contact form today to schedule a time for us to sit down and talk.
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