You often hear the term “trust” when a topic on estate planning comes up. Many people ignore it, thinking it is meant for people with “deep pockets”.
This isn’t the case.
As long as you have property that you need to transfer to another person or an organization, you need a trust. This trust makes the whole process legal, which is ideal for avoiding conflicts that might arise later on.
Setting up a Trust: who is Involved?
At the basic level, the process involves three parties that have different roles:
- The trustor – the person that aims to transfer the property to another person (trustee) according to preset rules.
- Trustee – as alluded in the previous section, is somebody or company that is assigned legal execution of the estate. He is responsible for making sure the stipulations of the document are followed.
- The heir – the person that will receive part or all of the property depending on the clauses of the document.
There are various cases that require a trust, let us look at these instances.
When is a Trust Vital?
To Circumvent Probate
When you write an estate plan, chances that it might go under dispute are high, even in a peaceful family setting. It is therefore a good idea at times to put your estate in probate so that you avoid the long process of disputes. Using a trust keeps your personal matters away from the public eye.
Enable a Smooth succession
When you handover the business into a trust, you need to ensure that it operates without any hiccups. Consult your estate planning attorney to be certain you follow the right process in establishing a trust.
Handover Real Estate Flawlessly to the Family
You can use a revocable trust to determine succession in your family. Doing this shields the property against tax assessment. Because you don’t have change in possession of the estate, reassessment is next to nil.
Protect Your Estate from Lawsuits
Using an irrevocable trust shields your property from people that you owe and complaints because the property in the trust is separate from your estate.
If you don’t take your estate planning seriously, your estate will end up facing several types of lawsuits that might split your family.
Give the Estate to a Child
When a child is one of the beneficiaries in your estate, take time and come up with a proper trust that will withhold the process till the minor is 21 years.
Get someone to manage the estate on behalf of the minor till he attains the recommended age.This step is vital because it protects the estate especially when the child has addiction or social problems. Seek out the services of a trusted estate planning attorney to draft the trust the right way.
Protect Your Estate
While you might have set up your estate over time, there are people out there that can squander the wealth in no time at all.
You can define a trust with the aim of controlling the spending pattern of your heirs. You can manage your property and then release them to the heir according to preset conditions.
This kind of trust will be able to offer the heir who isn’t good with money, or one that suffers from betting or drug addiction enough money to be comfortable. You can request the executor to dole out some sum every few weeks.
Provide for a Child Disabled
Leaving all your wealth to a person with unique needs can affect the eligibility of the child. Instead, implement a trust whereby the heir doesn’t receive the money directly rather they get something to supplement what they receive from the government.
Leave Your Money to a Good Cause
When you decide to award part or the entire estate to a charity, identify a representative to manage it to avoid misuse. However, this isn’t as easy as it looks, there are a lot of intricacies surrounding the types of assets that you can include in a charity, as well as any deductions and other issues that ensure you need professional help.
Conclusion
Using a trust is a guaranteed way to guard your wealth when you are gone. The trustee needs to be a person that has your interest at heart and will administer the estate as you have directed in your trust. Work with a competent estate planning lawyer to map out a strategy for the trust.
