When you’re making an estate plan, you have the option to put your assets into a trust. The alternative would be simply listing heirs and assets in your will, which means that those heirs will inherit the assets you have indicated, once your debts have been settled by your estate administrator. When you put the money into a trust, you can still leave it to whomever you please, but you’ll do it in a different way. The trust controls the assets, and the trustee will make the distributions.
There are many reasons to take this approach, depending on what you want to accomplish with your estate plan. It can give you more control and it can make the estate plan more flexible in certain ways. Here are two examples of different kinds of trusts that could be beneficial for you and your estate planning goals.
A special needs trust
One excellent example is a special needs trust. Individuals who are receiving certain government benefits often have to show that they do not have the means to support themselves. Therefore, if you simply leave someone assets directly, they would have to spent those assets down before getting their benefits again. But if you put the assets in a trust, it can be used to assist them without damaging their standing in terms of those benefits.
A discretionary trust
Another option is simply to choose a trustee that you can count on and give them full discretion to decide how the money and the assets in the trust can be used. Your beneficiary will still be named and could be one of your heirs. But they will have to go through your trustee to withdraw any money from their fund. This can be helpful if you feel that your heirs have poor spending habits, for example, and you want to make sure that they use the money for things like a college education, starting a business or buying a family home.
Setting it up
As you can see, estate, planning gives you a lot of different options. The key is to look into these in advance so that you can understand what options you have and how to set everything up. Establishing your plan as far in advance as possible can make things go much more smoothly. Seeking legal guidance is a good place to start.