A trust, simply put, is a legal entity that can hold assets for you or your beneficiaries. It’s managed by a trustee designated by you, who acts in accordance with your wishes. And it stipulates clearly how your assets should be managed and distributed.
There’s a widely-held misconception that trusts are only for wealthy people. Not true! In actuality, they can address a wide range of needs. And they can offer possible advantages for a wide range of people and situations. For example, say you’re a business owner who wants to keep his financial affairs private. Unlike wills, trusts keep assets and their disposition confidential.
Or, say you own some highly-appreciated assets, on which you’ll owe heavy taxes when you sell. A trust can shelter assets from income- or capital gains taxes. And a Charitable Remainder Trust (CRT) can provide income for life – and tax deductions.
Trusts also offer regular income to dependents…and possible tax savings for you. And you can specify the how’s and when’s of payouts to dependents, according to their circumstances.
One of the biggest advantages of trusts, however, is that they can transfer your property without the expense and delay of probate.
If you’re a retiree, widow or widower, a trust can provide a monthly check. They can provide management of your finances if you’re ill. A trust can protect children of a previous marriage. And it can spare friends and family from conflicts, both legal and otherwise.
If you’re the parent of a special-needs child, you can ensure the financial needs of the child will be addressed. And if you become too ill to manage your own finances, they’ll be handled by a guardian you’ve appointed.
You can even provide a “significant other” with lifetime-income, while still keeping the assets in your family.
Having said all this, there’s one important caveat – TRUSTS ARE NOT FOR EVERYONE!
The only realistic way to know if they’re for you is to consult with an expert.
