Is a Trust Right for Your Estate Plan?
Estate plans can be confusing to many people. After all, you might think having a last will covers everything. A will is an essential estate tool, but it's not the only tool you might need. Many people turn to trust planning firms to create trusts, and you might be wondering if you need a trust. Here is a guide to help you learn more about trusts to determine if you need one.
It's best for people with significant worth
First, it's important to know that trusts aren't necessary for people with few assets. However, they're good for people with significant worth. For example, do you own a house with equity? If so, a trust is a good idea. It's also a good idea if you have a lot of assets, including money in the bank. You won't need to worry about setting one up if you don't own much, though.
The purpose of a trust
A trust is a unique estate planning tool. In a sense, it's an entity. You create the entity and place your assets in it, meaning the trust owns the assets. However, you must specifically place your assets in the trust. They won't automatically become part of the trust just because you own them. Your attorney will help you create the trust and place your assets in it.
You designate what happens to them
Another part of the trust is designating what happens to the assets when you die. You can name a trustee, which is the person who becomes responsible for managing the trust when you pass away. You must select someone you trust completely, as they hold a key role in distributing your assets when you die.
You can choose different types
You might also want to talk to your lawyer about the various types of trusts, as there are several. Two common types are revocable trusts and irrevocable trusts. The main difference is your freedom to change the trusts. You can change a revocable trust, while you can't change an irrevocable one.
The benefits of a trust
One of the primary benefits of a trust is the ability to transfer your assets to your beneficiaries when you die easily. A trust simplifies this process and eliminates the need to go to court to settle an estate. Would you like to learn about other benefits? If so, contact a firm that offers trust planning services.