To many people, a trust seems like a basic (albeit highly effective) estate planning tool. The maker of the trust transfers ownership of certain assets to the trust, and a trustee manages those assets for the beneficiary or that trust.
But your trust can do a lot more than that.
A trust can protect your beneficiaries. A trust can provide beneficiaries protection from lawsuits, creditors, or divorce. Establishing an irrevocable trust means a future creditor or claimant cannot satisfy a judgment against the assets held in that trust. A trust can also protect the interests of a minor child by setting guidelines for when distributions are made.
A trust can provide for children with special needs. A trust can not only provide for the health care and personal needs of a child with special needs, it can also help ensure eligibility for Medicare benefits is maintained. And if you are concerned that a beneficiary is unable to manage assets wisely, an independent trustee can help make smart decisions on his or her behalf.
A trust can encourage certain actions or values. A trust can provide incentives to achieve certain goals: Education, profession, home ownership, community service… whatever you decide. That can make a trust a powerful tool in passing on your values and ethics.
A trust can preserve family wealth. Without careful planning, circumstances like divorce and remarriage can result in assets intended to remain in the family actually leaving the family. A well-crafted trust can ensure your estate is preserved for grandchildren and even great grand-children.
A trust can take care of pets. Who will take care of your pets when you’re gone? (Especially if your pet is a parrot with a lifespan of approximately 100 years?) A trust can not only specify who will take care of your furry friends, it can also provide the resources to ensure they are cared for properly.