Why Use A Trust?

When you're hoping to settle your finances and make things easier and simpler for your family, lots of terms are mentioned that you may not yet understand. Starting a trust, for instance, may sound like something that only wealthy people need to think about. However, such a setup could be smart for you as well, for the reasons here.

1-Avoiding Probate

If you suspect that either a creditor or a relative will attempt to drag your estate into the probate courts as soon as you pass away, a trust could be wise. Trusts are unlikely to ever end up in those kinds of courts because of the way they are set up and administered.

2-Being Private

Because the details of your trust are not likely to go to probate courts, they are far less likely than general wills to end up as public record. That means the public and prying eyes will be less able to look into your affairs to find out what you have and what you've left to which family members in your life.

3-Customizing Gifts

With a trust, it's easier to customize any financial gifts that you may want to give others. If you know that your teenage son isn't quite responsible at this time, you can tailor the way you give him his inheritance much easier with a trust in place. The trustee that you select will administer your wishes in a way that ensures respect of your hopes and plans for each person you give to.

4-Having Less Confusion

When you organize a trust for your own estate, you don't have to deal much with the bickering and the arguments that may erupt as a result of your decisions. This is especially true if you designate a trustee that has no personal ties to your family and will act independently of anyone's feelings.

5-Having More Protections Before Death

Unlike with wills, some trusts can be "revocable living trusts" which allow someone to take over your financial life before your death if you're ill or can't make decisions. With those trusts, you assume power when you're recovered. This means that you can feel secure that your affairs are responsibly handled if you're very incapacitated or sick.

Once you've got a trust in place, know that taxes and tax returns may need to be handled differently.  A capable financial planner will help you handle those and any other issues regarding your new trust.