Trusts are an important part of estate plans large and small. Unlike a will, a trust allows a person to manage and distribute assets in life, as well as in death. A recent article discusses why everyone needs a revocable living trust, and what the benefits of these trusts are.
1. Probate Avoidance
Many people utilize estate planning in order to avoid the process of probate. Probate is the court-supervised disposition of a person’s assets in accordance with his or her will. Many people wish to avoid probate because it is time consuming and expensive. Money transferred through trusts is not subject to probate.
2. To Care for Young Children
Most people would agree that a young child is not responsible enough to handle receiving unfettered access to a large amount of money. Even some young adults should not receive their entire inheritance all at once. By transferring inheritance via a trust rather than a will, the decedent can dictate at what ages the beneficiary will receive distributions.
3. To Manage Assets in the Event of Incapacity
Because a person can create a trust that operates during his or her lifetime, this trust can be designed to manage and distribute assets, as necessary, during the trust creator’s time of incapacity. Not only does this provide for the financial protection of the trust creator, but it also ensures that a person of the trust creator’s choosing is managing his or her assets in his or her place.