If you've considered drafting a trust as a part of your estate plan, you probably have some specific trust benefits in mind. Indeed, while trusts might not be for everyone, from an estate planning perspective, these highly flexible documents offer their creators -- and their beneficiaries -- some distinct advantages over a traditional will.
Here are three advantages of a trust you might want to consider:
- Trusts are private: Did you know that your will is a public document? Once the probate process begins after your death, anyone can look up the details of your will and anyone can determine who is getting what with regard to your estate. Trusts, however, are different. These are private documents and the assets inside them are kept confidential, as well as the people who benefit from those assets.
- Trust assets skip the probate process: Since your trust is technically a separate legal entity, the assets you place inside the trust become the property of the trust, and they're not yours anymore. This means that they're not a part of your estate and won't be subject to the probate process. The assets inside the trust will be managed by the trustee in accordance with the way you drafted the trust, and the beneficiaries of the trust will be the ones who immediately benefit from those assets (without the need for probate).
- Trusts give you more control of the way you distribute your assets: Imagine you have an alcoholic son, and you don't want him to receive $4 million immediately after you die. Rather, you'd prefer that your son receives $2,000 monthly from the trust until he dies, and then you'd like the remainder of the trust to go to a special charity. This kind of creative asset distribution plan -- and so many others -- are available to trust creators.
A trust could be a great addition to your estate plan. Before you decide to create a trust, make sure you explore what kinds of trust options exist, and which ones are appropriate for you and your family's needs.