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Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance. She has mastered the art of boiling down complicated financial topics for readers to understand. |
A Trust can make it much easier for your heirs to redeem the assets left to them once you pass. Check with your financial advisor if a Trust will be beneficial to you. Reasons to Consider Setting Up a Trust By Britt Erica Tunick While trust funds have long been associated with the incredibly wealthy, your children don’t need to be hotel heirs or heiresses to reap the benefits of a trust. Though it goes without saying that everyone should have a will in place, in many instances the best way of passing on assets, from money to property, to your heirs after you have died, is through a trust. One of the biggest benefits of a trust is that the assets held within them are protected from probate, meaning that they are immediately available to the individual, or individuals, a trust has been set up to benefit. In states where the probate process can be extremely lengthy (according to Fidelity, the average uncontested probate takes longer than a year), utilizing a trust can make things significantly easier for your heirs to take possession of their inheritance. Not only can probate fees add up to significant sums, the process of probate is also public meaning anyone can see your assets and what you are leaving to your heirs. Another major benefit of trusts is that, depending on the type of trust you establish, they can also provide tax breaks. Take, for instance, life insurance trusts, which essentially wrap a life insurance policy within a trust. Doing this means that any money paid to your heirs at the time of your death will go straight to them, instead of through your estate where that money would be subject to what can be costly estate taxes. Of course, you don’t need to be dead to utilize a trust to transfer wealth. There are a wide variety of trusts: from charitable trusts established to make regular gifts to set charities both during an individual’s life and long after they are gone, to trusts set up in order to set certain conditions for an individual to take possession of their inheritance. In the case of the latter, trusts have long been popular among the extremely wealthy as a way of keeping heirs from receiving their inheritance in one lump sum. Instead, such trusts will frequently attach conditions to an inheritance, such as the requirement that the recipient graduate from college before being allowed to touch the assets placed within a trust, or the establishment of a laddered distribution where a recipient will receive only a portion of their inheritance each time they hit a certain age or milestone. Given the wide variety of trusts that can be established, if the idea of a trust is appealing you should consider meeting with a financial advisor to discuss the options that would be best for your individual situation. |
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