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Are people too dismissive of the idea of executing a trust?

One of the more common questions to arise in the context of estate planning is whether a person really needs to consider executing a trust. While some of this inherent doubt can, of course, be attributed to the longstanding misconception that trusts are somehow reserved for the very wealthy, some of it can also be attributed to the reality that most assets can be passed on via a simple will and beneficiary designations.

While it’s true that a person can accomplish many of their estate planning objectives via these mechanisms, it’s also true that a trust can do the exact same thing while also avoiding probate and minimizing taxes.

In today’s post, we’ll explore other reasons why someone who doesn’t consider themselves to be incredibly wealthy may nevertheless want to consider executing a trust for the benefit of their family.

How exactly would executing a trust benefit a family?

The real value of a trust is that it allows the trust creator — otherwise known as the trustor — to establish very specific instructions concerning how trust assets are to be distributed.

For instance, the trust could direct the trustee to distribute a set amount of money in set intervals to a spouse about whose spending habits the trustor has long found suspect. Similarly, it could dictate that an older grandchild receive a larger share of their bequest than their younger counterparts at the outset in light of their presumed financial maturity.

Are there any other ways in which a trust can protect family?

Absolutely. Trusts become especially valuable if the trustor has remarried and has children from the first marriage. Specifically, executing a trust can help ensure that assets initially pass to the surviving spouse from the subsequent marriage, but then revert to the children from the first marriage. Essentially, it prevents those scenarios where the assets end up going to the surviving spouse’s children rather than the children from the first marriage.

Can a trust benefit a family in a way that is not necessarily protective or otherwise restrictive?

One of the often overlooked advantages of executing a trust is the flexibility it grants relating to its terms. For example, it could contain a sort of incentive provision that awards grandchildren a set sum upon completion of an advanced degree or encourages philanthropy by agreeing to match certain charitable donations.

What the forgoing serves to demonstrate is that those considering the execution of a comprehensive estate plan should remain open to any and all options, especially trusts.

To learn more about trusts or other estate planning options, consider speaking with an experienced legal professional as soon as possible.



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