Posted by Income Taxes and Bookkeeping LLC

Possible Reasons You Might Need a Trust

Possible Reasons You Might Need a Trust

Many people feel they do not need trust. They believe since they do not have a large estate, they do not need any elaborate planning. They believe it's expensive and complicated. So they ask what would possibly make them need a Trust?

This article will shed light on the reasons why a trust might be beneficial to you. But before them, a little explanation about trust will set the proper foundation.

 

What is a Trust?

A trust is a document backed up by the law with which you can transfer your assets and personal properties to family members, relatives, and loved ones after death. It is possible without that troublesome and costly court process known as probate. 

Here are possible reasons you need a trust

  1. A Trust removes the Need for probate

With a trust, you can avoid thousands of dollars as attorney charges, probate fees and costs, etc. It saves money and distributes your estate to the heirs after your death. 

  1. You want control

The trust will typically contain the instructions you give to manage your assets and how your funds will be used after death or should you be incapacitated. You might not handle your affairs, but trust helps ensure that the matters are handled how you prefer. 

Besides, while you can, the complete control of your property remains with you. Nothing stops you from selling the properties, using or even giving them away. You can also change the beneficiary as you wish. 

  1. It does not Consume Much time.

Rather than taking months or years at a time, the trust allows your estate to be settled in a few weeks after death. All interference from courts or the judiciaries is out of the way. 

Should you be incapacitated, your appointed trustee takes over your estate to benefit you, without the Need for court-conservative. 

  1. You get to maintain your privacy.

A living trust enjoys privacy. Should you be incapacitated, the news will not leave the family. Even after death, there is no need to announce in the newspaper to get creditors to file claims, the contest will or startle relatives. Most times, the beneficiaries are usually private.

  1. Requires no Special Maintenance

After setting up your trust, you do not need any elaborate changes. Amendment only happens when you desire to change the beneficiaries or other details. There are times the government might pass a law that could affect your trust. This, however, is rare.

  1. Trust is less Expensive.

Bear in mind that the costs of probate are part of the cost of using a will to settle an estate. While trust could be initially expensive since it involves no probate, the entire costs are pretty affordable. 

As long as your estate planning attorney is competent, there will be cost savings. Also, the trust will be pretty easy to create.

  1. Removes the Need for any Government form

A revocable living trust removes the Need for a specific tax ID number. Since trust is tax neutral, you need not file a separate tax return. Your income will usually be reported on your personal tax return. 

It removes the Need to file any special agreement, report, or notice with any government body as your social security number can serve as your tax ID number. 

  1. A Living Trust makes Special gifts easy.

One can make some unique gifts to some people, agency, or organization as trust makes this easy. There is a list of such gift items available as a reference on a trust. This list allows you to identify who you select as the recipient of some things, which could be personal items. Examples are jewelry, furniture, etc.

This list is also part of your trust documents. It can be amended at any time without effect on your trust.

  1. Reduce or get rid of estate tax

If you can carefully plan your trust agreement, it is possible to reduce or even eliminate an estate tax that could be charged at death. 

  1. Makes Prenuptial Planning Effective

Whatever property in your trust before your marriage will remain bound to the trust; it will be distinct from the properties you accumulated during the marriage. 

However, one needs to be careful and avoid commingling of assets with the ones acquired from both spouses in marriage.


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