Have you been thinking about your estate plan lately? Planning for your death may not be a pleasant experience, but it's very necessary, especially if you have assets that you would like to pass to your family, friends, or even charity. One of the most common planning documents is the will, as it directs your estate administrator on how to distribute your assets. However, a will can't solve every estate planning challenge. In some instances, you may be better served by a trust. Not sure if you need a trust? Below are three common situations in which a trust may be helpful:
You want to control how your heirs receive their assets. It may be possible that you want to leave money, real estate, or other assets to your loved ones, but you don't necessarily trust them to manage the inheritance. Perhaps your children have trouble managing money, and you're afraid they'll waste it. Or maybe one of your heirs is a child or has mental limitations, and is incapable of managing a large inheritance.
In these cases, a trust may be suitable. With a trust, you designate a trustee to manage the asset. The trustee can determine how assets are distributed. You can also specify exact instructions on how to manage the assets on your heir's behalf. That allows them to enjoy their inheritance without having to manage it.
You have a blended family. Perhaps you remarried and have a blend of children from a previous relationship along with stepchildren. Even though you likely love all of your children, you may wish to designate certain assets specifically for your biological children from your previous relationship. Without a trust, it's possible that your assets could go directly to your spouse. If he or she doesn't have a solid estate plan, the assets could then pass onto his or her biological children, cutting yours out altogether.
With a trust, you can carve out assets specifically for your children and for your spouse. That way, all parties are left happy and there isn't any conflict or dispute after your death.
You want to avoid probate. When a person dies, their estate often has to go through a legal process called probate, in which the court settles all outstanding obligations, inventories assets, charges taxes, and then distributes assets to heirs. This process can be costly and time-consuming, and it may not be in your heirs' best interests, especially if they'll need the money quickly.
You can avoid probate by using a trust. Since a trust has a beneficiary designation, it usually doesn't have to go through the probate process. Your heirs can get their assets according to your schedule and wishes, without court interference.
For more information, talk to an estate planning attorney. They can help you decide whether a trust is right for your estate plan. Click for additional info.