6 Reasons You Should Consider Having A Trust

Are you concerned you’ll lose your assets or business to a lawsuit? Are you worried about how your loved ones will be taken care of in the event of your death? If any of these are true, you should consider setting up a trust. Trusts have proven to be quite beneficial when it comes to asset management.

Having a trust will help you in the following ways.

Protect Your Assets From Creditors

Some business owners opt to keep some of their crucial assets in trusts. The assets in trusts are not known to be owned by the business, but rather by the trustee. This enhances their security.

If a business owner loses in a lawsuit and the court orders the seizing of their assets for compensation, creditors can’t touch the assets in a trust. They likely won’t be aware of the existence of these assets, and even if they are, they know you no longer own them if the trust you set up is irrevocable. Therefore, they can’t claim the assets.

However, it’s important to note that this doesn’t apply where the trust is revocable. That’s why you should know the differences between irrevocable trust vs revocable trust; you need to be able to make an informed decision on which one to set up.

It should also be mentioned that this doesn’t only apply to business owners. If you’re in a profession that could be prone to lawsuits, such as medicine, you can open a trust to set aside some of your assets.

Take Care Of Your Partner

Trusts are very helpful if you aren’t legally married to your partner. If you only have a will, your partner won’t be entitled to any of your wealth when you die, because they won’t be recognized as your family. Instead, your assets may be reassigned to your other family members. This may put your partner in distress and leave them with nothing to cater to their needs in your absence.

You can prevent this by establishing a trust. With a trust, you can assign your spouse to be the beneficiary of the assets in that trust when you die. This way, your spouse will be well taken care of even after your passing.

Flexible Asset Distribution

A trust gives you the option of allocating your assets as you deem fit. If you have an irresponsible beneficiary who can’t manage their finances well, you can arrange for periodic payments instead of a one-time payment. Depending on the type of trust, your trustee will send them a specific amount periodically for their use.

A trust will also enable you to specify how the money given should be used, whether it’s for health care, rent, food, and the like. If the beneficiary needs the money for other uses that aren’t approved of, the trustee won’t provide them with the funds.

Keep Your Assets Private

The assets you list in your will may be made known to the public, especially if conflicts arise in the distribution and in cases held in public courts. However, with a trust, the assets listed may only be made known to your trustee and beneficiaries after your death. Your family won’t need to go to court to gain access to the assets you leave behind, so these won’t be revealed to the public through court sessions.

It’s essential to note that some states might require you to inform the relevant bodies if any of the assets in your trust are real estate. This may cause your assets to be publicized. Therefore, please be sure to do your due diligence before deciding on a trust to open.

Safeguard Your Children’s Future

As a parent, it may be essential for you to ensure your children’s future is safe, even in spite of unexpected circumstances. You’d want to ensure they’re taken care of even in your absence.

A trust gives you the choice of accumulating wealth for your children, even when they’re at a tender age. You won’t have to worry about them squandering it; you get to choose when your trustee gives them the funds. It can be when they reach a certain age or after they achieve a certain milestone, such as graduating. With this, you can ensure that they’ll access the funds only when they can make sound financial decisions.

You can also set up a trust solely dedicated to their education. The trustee will use the funds in the trust to pay for your children’s school fees. In most cases, if there’s a surplus left after your children complete school, the remaining money is divided equally among them for their individual use.

Reduce Costs

A trust can help reduce the costs you and your beneficiaries might incur. As stated earlier, your beneficiaries won’t need to go to a probate court to gain access to the assets you leave behind, as is often witnessed with wills. This saves them a considerable amount of money they would have incurred on attorney and court fees, considering they’d have to probate in each country an asset is located in. They’ll also save a lot of time, and after all, time is money.

By putting assets in a trust, you also save money as the grantor. You may be granted some tax exemptions. You might not be liable to pay income tax on your assets. This saves you money that you could reinvest to generate more wealth.

Conclusion

Trusts are an essential thing to have, especially if you have many assets or if you’re worried you may find yourself in a lawsuit in the future. You don’t want to lose your hard-earned assets with the drop of a gavel. Considering the points listed above, you may now have enough reason to call your lawyer and set up a trust, not only for your benefit but also for that of your loved ones.

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