When many people think of estate planning, they just want to write a basic will. They can split up their assets and, as soon as they pass away, the estate goes through probate and the beneficiaries that they named receive those assets.
While this can be useful, it is fairly straightforward. For those who want to utilize more options or have more of a say in how their estate is handled, it may be beneficial to use a trust.
Addressing how distribution should be handled
For one thing, a trust can be used to dictate specific terms around the distribution of assets. Perhaps you want to make the beneficiary wait until they reach a certain age, for example. If you are worried about leaving assets to a relatively young beneficiary, you could use a trust to establish that they should only get the funds when they turn 30 or 35.
You can also use a trust to provide assets only for specific uses. One common example is setting up an educational trust to fund someone’s college tuition, for instance, or leaving money that can be used to start a business or buy a home.
Putting the trustee in charge
Another benefit is that you can decide who gets to make decisions about how to use the money. In a will, the beneficiary just receives the funds and can use them any way that they wish.
But with a discretionary trust, you are allowed to pick a trustee who can then make decisions or choices for the beneficiary. They just use their discretion to make wise choices, helping to protect the assets that you are leaving to the next generation — especially if you are not sure that the beneficiary will make choices you would have approved of.
Establishing a trust
These are just a few of the benefits of using a trust over a simple will. If you are working on your estate plan, be sure to carefully consider all the legal steps you will need to take.