How Setting Up a Trust Could Be the Best Decision You've Ever Made
There’s a common stereotype that trusts are a luxury that only the truly wealthy needs to be concerned with, but that’s far from the truth. Anyone who has any property or assets can use a trust to determine how those assets are apportioned after their passing to ensure that everything is distributed as they prefer.
Trusts are legal documents that are created by you and controlled by a trustee - you as the grantor, or a person of your choosing. The trust then holds the listed assets for the beneficiary, or person who is to receive them upon your passing.
There are many reasons to start a trust, but here is why setting one up now may be the best decision you could make.
Why You Should Set up a Trust
Starting a trust has many advantages to it. However, there are a few major benefits that make the difference when it comes time to decide whether you need a will or a trust.
The primary factor that turns more people to trusts is that you can avoid probate this way. Probate can go on for an extended period of time, during which period legal fees are adding up and there is an extensive amount of paperwork. Avoiding probate is the ultimate goal for most people - they don’t want their loved ones to sit around waiting for a judge to determine the validity of their will, going through extra stress and uncertainty the whole time.
Along the same lines, another benefit to trust is that, unlike a will, a trust is not easily contestable. You have more protection against someone challenging your trust than you would a will. It’s not impossible, though. A trust’s validity can be challenged if someone claims that you as the grantor were mentally unable to set the trust up or that you were under duress - extreme influence from another party - and did not set the terms of your trust up of your own free will.
Finally, trusts are the smart way to go if you want to avoid your beneficiaries having to pay estate taxes on their inheritance. Assets and property that are placed into a trust can’t be penalized by this estate tax, so your estate’s value is reduced and your loved ones will not have to pay nearly as much as their tax liability. However, these estate laws vary and you should discuss them with a professional fiduciary before you make your final decisions.
The Smart Financial Move for Your Property and Assets
While there are many other advantages to a trust over a will, these legal benefits can help give you the peace of mind of knowing that your property and assets will be distributed the way you intended once you are no longer here to supervise the distribution.
Knowing that your wishes are not going to cause undue stress on your loved ones as your will is dragged through probate, that your stipulations will be difficult to challenge, and that your beneficiaries will get the majority of their inheritance rather than paying most of it to taxes means that setting up your trust is one of the smartest financial decisions you could ever make.