Setting up a trust is a fairly involved process, but it can serve several purposes. If you're thinking about contacting a trust lawyer, it's a good idea to start wrapping your mind around the primary reasons for creating a trust. Here are five of the most common reasons individuals, families, and organizations go this route.
Avoiding Estate Probate
When an estate goes into probate, the assets and funds within it are frozen. This sometimes takes months to sort out.
One advantage of a trust is that it can be established while the grantor is still alive or immediately upon their passing. If you're especially worried about your surviving spouse or kids getting the money they need to get by, it's a good idea to have a trust in place. This will ensure that funds will be available to them on the first day after your passing.
Public Records Laws
When a will goes into probate, it becomes a matter of public record. For families that have concerns about negative publicity, a trust makes it possible to avoid making assets public. Likewise, this will reduce the odds that unscrupulous parties will learn that beneficiaries have come into money.
Incapacity or Disappearance
Although people tend to think of estate planning as largely about what happens if they die, there are other scenarios where you might not be able to dispose of your assets. If someone suffers a stroke or disappears while hiking, for example, it could take a long time to make resources available to beneficiaries. The same concerns about helping a spouse and dependants pay for their lives exist under these circumstances, but there may not be a death certificate coming to move the estate process forward.
Control of Assets
Another advantage comes from the ability to move assets in and out of certain kinds of trusts. It's important to discuss your goals with a trust attorney before you set one up because irrevocable trusts can present problems. However, if there might be circumstances where you want someone to benefit from assets without having full control of them, this is a good idea. Likewise, it provides financial flexibility in case you need to pull assets out for use as, for example, collateral.
Limiting Long-Term Costs
Parsing assets out through a trust over time is a good way to slowly distribute them. With an estate, everything hits at ones and the tax implications for larger ones can be tough to swallow. A trust keeps you outside of that part of the tax system.
Contact a trust attorney near you to learn more.