A trust is a legal arrangement whereby property is held by one party (trustee) for the benefit of another (beneficiary). Trusts are often used to avoid taxation, reduce the cost of probate, and allow property owners to provide for loved ones when they die. In fact, trusts include complex legal arrangements. So, if you are planning to create a trust, it is better to schedule your consultation with a trust planning attorney.
Anyway, the primary objective of a trust is to avoid probate. Probate is the legal process by which a will is validated. In layman’s terms, probate refers to the court-supervised process of transferring assets after someone’s death. After an individual dies, his or her property will pass through probate before it can be distributed according to the terms of his will.
Here are some benefits of creating a trust:
- You can determine where your assets go and when your beneficiaries have access to them
You have the right to choose where your assets will be distributed at any time. By creating a trust, you can make sure that your assets will be distributed according to your wish.
- You can save your beneficiaries from paying estate taxes and court fees
If you are planning to leave a considerable estate, then your beneficiaries will have to pay a significant amount of money if they want to get their inheritance. On the other hand, by creating a trust, you can reduce the tax burden of your beneficiaries and make sure that they will receive their inheritance without any hassle.
- You can protect your assets from creditors that your beneficiaries may have, or from loss through divorce settlements
By creating a trust, you can protect your loved ones from creditors, lawsuits, and any other legal action. This way, only those who need them will receive them. In addition, a trust will protect your assets from your beneficiaries during a divorce.
- You can avoid a lengthy probate court process
As mentioned earlier, probate is a court-supervised process by which the assets of an individual are transferred to the beneficiaries after his death. It is a complex legal process, which may consume a lot of time to be finished. On the other hand, if you create a trust then inheritance can be distributed without going through probate.