Trusts can often be misunderstood. Many may assume a trust is only an option for the very wealthy. However, establishing a trust can benefit your loved ones after your passing regardless of your financial status. As part of Financial Literacy Month, we are sharing a bit of information about trusts and why they may be a good option for your family and estate.
Why Should I Establish a Trust?
One of the more common reasons people may choose to establish a trust is to avoid probate fees. Also, there are other reasons to consider a trust such as:
- Protecting assets from beneficiaries’ creditors
- Protecting assets from the beneficiaries overspending
- Keeping family wealth and assets within the family in the event of divorce or subsequent marriages
- Reducing inheritance taxes
Every situation is different, which is why you should speak with an attorney who specializes in estate planning. They will help your family establish the best type of trust for your situation. They will help you identify assets which will be important to include in your trust.
Types of Trusts
There are two types of trusts: irrevocable trusts and revocable trusts. Both protect your assets. However, there is a significant difference between the two. An irrevocable trust cannot be changed or amended once established without the permission of the beneficiaries. A revocable trust can be cancelled or modified at any time by the owner without the knowledge or say of the beneficiaries. So, if you are considering establishing a trust, talk to your family attorney about your situation. They can guide you to the best option for your situation and needs.
What Can I Include in My Trust?
Because you may be creating a trust in part to avoid probate fees, it may be of benefit to include anything of value in the trust. If you have chosen a revocable trust, you can add to that trust at any time. Or you can also remove items which have been sold or gifted. Here is a partial list of things you could consider including in your trust:
- Stocks, bonds and other investments
- Life insurance policies
- Jewelry, coin collections, stamp collections, and artwork of value
If, when establishing a trust, you choose an irrevocable trust, remember that you will need the beneficiaries’ permission to sell any items held by the trust.
Call Wagstaff & Pitelis, P.A.
Establishing a trust is something each family should discuss with their family law attorney. As an experienced family law firm, we work with our individual clients to guide the estate planning process from start to finish. Call us today at (727) 584-8182 to schedule your confidential consultation.