Have you been under the impression that a trust is something that is only used by very wealthy people? That is simply not true, since it is an estate planning tool that can be used to pass down assets to their heirs. A trust can even be used in a simple situation where you want to pass down all of an inheritance to an only child. Here is what you need to know about using a trust for your estate planning needs.
What Makes Trust Unique?
Many people think that a will is the way to go when creating an estate plan, but it simplifies the process a bit too much for some situations. A will is executed once you pass away, and it simply causes all of the defined assets to go to the heir.
What makes a trust unique is that you have complete control over what each person in the trust receives, when they are able to receive it, and if there is a set condition for receiving it.
How Does A Trust Work?
Think of a trust as if it were a box that you put all of your assets into. This includes your home, savings, investments, and personal property into the trust. The items in the box belong to the trust, and the person that manages those items is considered the trustee. Anybody that is assigned to receive assets in the trust is considered a beneficiary that is assigned to the trust.
Who Is The Trustee?
With a trust, you can set a line of succession for who will be the trustee. For example, most people make themselves the trustee while they are alive so that they have full control over the assets in the trust. The role of the trustee will then move onto a spouse, child, or grandchild over time. It should be someone that is responsible enough to carry out your wishes of how the money and assets in the trust are used. Sometimes a lawyer is assigned to be the trustee.
How Are Conditions Set?
The problem with a will is that all of the assets are released upon your death. With a trust, you can set conditions on how those funds are released. For instance, you may set aside a certain amount of money to be used for a child's college education, or for their down payment on a home. This helps ensure that the money in the trust is used as you intended it to be used. For more information, contact an estates and trusts attorney.Share
21 January 2020
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