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4 Things to Know About Trusts

  1. Trusts are not just for the wealthy. Trusts are accessible to anyone at any income level. One common misconception is that one needs to be wealthy in order to afford to pay the trustee fees, especially those of an institutional trustee. However, there is nothing requiring you to chose an institutional trustee, such as a bank, to administer your trust. Family members and trusted friends can do the job for little to no cost. A trust is a powerful document that ensures that your assets are disposed of according to your wishes; the perceived fees associated should not affect your ability to have protection.
  2. Trusts allow you to keep information about your assets and debts confidential. One of the greatest benefits of having a trust is to ensure privacy upon death. A trust prevents your assets from going through probate. Because your estate will not have to be probated, there will be no public court documents that can be found. No matter your assets or debts, many people do not want to share this information with the public. A trust provides a powerful tool to ensure privacy and to keep the public out of your financial life.
  3. While a trust gives you a lot of discretion, not all provisions will be enforceable. A trust can be a very useful vehicle to ensure that your wishes regarding your estate are honored. However, the Court will not validate requests that are illegal or against public policy. For example, requiring a beneficiary to get a divorce in order to receive his trust distribution would not be upheld. Make sure that when you draft your trust, you consider public policy to ensure the document is enforced in its entirety.
  4. Trusts can protect you and your family from creditors. Another great incentive to have a trust is to ensure that your family is protected from your creditors, should you die with debt. Because a trust creates a legal entity and transfers title of your property into the name of the trust, you no longer technically own that property and therefore it can be shielded by creditors. Likewise, if you die with debt, creditors can still reach property titled to your name, and thus it can be taken from family members who have inherited that property. If you want to protect your assets and your family from creditor’s ability to satisfy your debts with your assets, a trust is an appropriate estate planning strategy for you.
Tags: debt, estate planning, probate, taxes, trusts
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