If you are in the process of creating or updating your estate plans, you may want to think about incorporating a trust to help protect your legacy. Trusts are not for everyone. Many people who have basic assets and wealth do not necessarily need to have trusts. However, if your estate involves more complex considerations and assets, a trust could be necessary to ensure that you retain control over what happens to your assets after your death.
When structured properly and with the right trustee selection, a trust can give you greater flexibility than a will over your assets. To avoid potential issues that could render your last wishes less effective or nullify them completely, consider the following information about estate plan trusts:
Greater flexibility and control over inheritances
You may have older or grown children who could need some help managing their inheritances. If any of your beneficiaries are not good with finances, you can use a trust to help keep them from squandering their inheritance. You can also use it to provide a financial cushion that disperses an allotted amount of funds according to a schedule that you set. For example, you may create a trust that pays your adult child $20,000 every five or 10 years or when she or he reaches a certain age.
Keep sensitive information private
You may not realize it, but any estate that does not have any wills or trusts is subject to probate court. Once an estate ends up in probate court, it loses all measure of privacy. Your assets and liabilities become a matter of public record. That means creditors and anyone who feels they have a claim can leverage disputes against your estate. Assets that you include in a trust remain private.
As beneficial as trusts are for estate plans, much of their effectiveness hinges on the trustee. To protect your final wishes, and to ensure that your beneficiaries receive their inheritances with minimal to no issues, educate yourself and weigh all options before choosing a trustee and setting up any trusts.