Trusts can be an extremely powerful and useful tool for estate planning, potentially saving your surviving family members from the lengthy and often expensive process of probate. However, you may be reluctant to create a trust because of a perceived stigma. At the Law Offices of Frye & Vazquez, we believe that the stigma may stem from a lack of understanding that causes misconceptions in the public.
In an attempt to help you better understand the potential value of a trust and why you should at least consider it, we present the following myths about trusts presented in Forbes Magazine and the truth behind each.
1. Only rich people need trusts
Regardless of the size of the estate you leave behind when you die, it will have to go through probate whether it is large or small. That often means significant costs and hassle for your surviving loved ones as they wait until the process plays out to receive their inheritance. Putting these assets in a trust allows your heirs to shorten the probate process and receive their bequests more quickly.
It is true, however, that wealthy people and their heirs may receive additional benefits from a trust. A large estate may be subject to death taxes, but a trust helps you to shrink the size of your estate so that the taxes do not apply.
2. Setting up a trust means losing control of assets
It depends on the kind of trust you create. A revocable trust allows you to make changes at any time, meaning you retain control.
3. Young trust fund beneficiaries grow up spoiled
The concern is that having access to money and assets will cause children to become lazy or entitled when they grow up. This is by no means a foregone conclusion, but if the possibility is a concern of yours, you can set conditions on when and how you want your children to receive their benefits.
4. Having a will means that you do not need a trust
A comprehensive estate plan that takes every possible contingency into account often includes both. More information about trusts is available on our website.