There are many reasons why setting up a trust for you and your family is a smart decision.
Probate Avoidance. The first is that you can avoid probate. Probate is the court’s process of ensuring that your debts are paid and assets are properly distributed. However, probate can be both an expensive and time-consuming process. Legal fees, court costs, and fees for the personal representative all must be paid before any assets can be distributed to your beneficiaries. In addition, this process often takes months at a minimum and can extend up to a year or longer if beneficiaries are contesting your will.
Privacy. Another reason a trust might benefit you is that a trust can ensure your privacy. While probate is a public matter, meaning anyone can see the size of your estate and who receives what assets, a trust allows your personal and financial matters to stay private. Maintaining your privacy can help ensure that heirs don’t get upset and try to contest the distributions.
Controlling Distributions. Control of finances is another benefit to creating a trust. Creating a trust grants you the power to control exactly how, when, and to whom you want funds to be distributed. For instance, you can delay distributions until beneficiaries reach a certain age, which is helpful if your children are still minors. You can also require that distributions not be made until they graduate from school – whether that be high school, college, or graduate school. Furthermore, you can impose restraints on what the trust funds can be used for (ex. education, support, necessary expenses) and how much a beneficiary shall receive each year. If you are concerned about a beneficiary’s ability to manage the funds, a spendthrift clause can be included which precludes creditors from being able to get ahold of the funds. Overall, there are many ways a trust allows you to control how funds will be distributed and used.
Flexibility. In addition to providing control, trusts also allow a great amount of flexibility. If you decide to create a revocable trust, you can change the terms of the trust at any time. This allows the trust to change and adapt in response to your changing lifestyle and fluctuating needs.
Incapacity and Special Needs. Two further reasons why a trust could provide you benefit is in the event of incapacitation or if you have special needs children or grandchildren. If you become ill or incapacitated, rather than having to go through a lengthy and possibly degrading court process of appointing a conservator, your chosen successor trustee can step in and manage your affairs. Also, if you have special needs children, a special needs trust allows you to leave them inherited assets without disqualifying the child from receiving governmental benefits, for example SSI or Medicaid.
As you can see, there are many reasons that a trust can be catered to your needs and specifications and thus is likely the right decision to protect you and your family’s future.
If you have questions about forming a trust or are ready to schedule your free initial consultation, please contact Windrose Law Center PLC at 602-457-1846.
By: Dylan Wilson, Law Clerk, Windrose Law Center PLC