It’s important to go beyond simply transferring your assets to loved ones when crafting your estate plan. You should also consider protecting your assets from potential risks and threats even after your death. That’s where a trust comes into play. It can be a valuable estate planning tool to help you achieve this goal.
A trust acts as a shield by creating a separate legal entity. Transferring assets into a trust places them under the control of a trustee, who manages and administers them on behalf of your beneficiaries.
Trusts offer a range of advantages over other estate planning tools like wills by reducing estate taxes and protecting assets from creditors or other unintended third parties. Below are some tips to help maximize these and other benefits of trusts.
Choose the right type of trust
There are various types of trusts available, with different features and benefits. For instance, revocable trusts allow you to retain control over and access to your assets but do not shield them from creditors or lawsuits.
On the other hand, you give up your ownership, control and access to trust assets with an irrevocable trust. However, it provides greater protection from creditors and legal claims. Choosing the right structure of your trust based on your specific needs and objectives is important.
Transfer your assets to the trust as soon as possible
The sooner you create and transfer your assets to the trust, the more likely it is that they will be protected from future creditors or lawsuits. Do not wait until you face a legal claim or financial hardship to do so, as it could void the trust.
Comply with the terms of the trust
Once you have everything up and running, follow the rules and terms of the trust to help ensure its validity. Interfering with the trustee’s responsibilities or violating the terms of the trust jeopardizes its legality and enforceability, exposing your assets to unnecessary risk.
Trusts can be powerful estate planning tools, but they require careful planning and execution. Learning more about how you can utilize them in your estate plan and seeking experienced legal guidance to help you make informed decisions is essential.