A trust is a legal entity that you create to own and control specific assets. Many people choose to add trusts to their estate plans for their protection or for the benefit of family members and heirs.
There are many kinds of trusts, and each offers specific benefits. However, there are certain, general benefits that you can derive from most well-planned trusts.
Certain assets won’t have to go through probate court
When you transfer ownership of an asset from you as an individual to the trust, you eliminate the requirement for that asset to pass through probate before someone assumes control over it after your death. Assets used to fund a trust generally won’t have to pass through probate court, even if they are assets, like real estate, that usually require probate oversight for estate transfers.
Creditors will have a harder time diminishing your legacy
At the time of your death, any assets in your name are vulnerable to claims by your creditors. Even if there are no co-borrowers on your various debts, your estate would still have to use your property to repay your creditors before distributing assets to your beneficiaries.
The more debt you have, the greater the likelihood that creditor actions would substantially diminish your legacy. Moving assets into a trust is a way to protect them from debt collection efforts after your death.
You will have an easier time qualifying for Medicaid
Older adults often don’t know what will happen with their health throughout their retirement years. If you reach a point where you require nursing support or to live in an assisted living facility, you will need Medicaid benefits if you don’t have enough personal assets to pay those costs yourself.
Moving some of your property into a trust well before you apply for Medicaid will help ensure that you qualify for benefits if you need them while protecting your biggest assets, like your home, from claims by the Medicaid estate recovery program.
You remain in control of your assets even after your death
When you use a will to transfer your property to your heirs, they can do whatever they want with those assets after they inherit them.
When you use a trust, your family members can only access trust resources when their circumstances meet the standards that you have set. You can limit how much they withdraw or what they use their inheritance for. You can also control what happens to the remaining assets in the trust after the death of your beneficiaries.
Integrating a carefully planned trust into your estate plan offers benefits for you and protection for your loved ones.