While plenty of people feel like trusts are only for the wealthiest people and couples in the U.S., the truth is that trusts are beneficial to individuals from all walks of life. Trusts can be used to help pass down assets, could hold life insurance benefits after you pass away or could even protect assets against creditors during your lifetime.
Having a trust can be a good part of your wealth management strategy. Here are three reasons to consider one, even if you don’t have much to put into it.
- Trusts help your beneficiaries avoid probate
The probate process is tedious and time-consuming, at best. Assets controlled by you need to go through probate to be verified and distributed as you intended. If you put them into a trust, they normally don’t have to go through that process and pass down to your beneficiaries directly.
- You could see better protection with a trust
A good irrevocable trust can help you protect your assets against collections. If you have a property that you paid off, for example, that you’d like to have go to your child, putting that property into a trust isn’t a bad idea. Then, if you do end up in debt or have collections activity against you, that property won’t be at risk in the future.
- Trusts can help in cases of illness and disability
If you build a will, it will only go into effect once you pass away. A trust doesn’t work the same way. Instead, it can be activated quickly if you become ill or aren’t able to take care of your assets any longer. In those cases, the trustee of the account can move to make distributions for you, file your tax returns or even pay your bills through the trust.
As you can see, a trust is not simply designed to hold assets. It has many other benefits that could be of help to you. Your attorney can go over the additional benefits that trusts may provide if you’d like to consider adding one to your estate plan.