Trusts Are Not Just Tools For the Wealthy

June 10, 2011

Trusts Are Not Just Tools For the Wealthy

It is true that trusts are invaluable tools for those with a large amount of assets. Trusts can help to avoid estate and gift taxes; they can put conditions on the money in the trust fund to prevent large amounts of money being available to someone too young to manage it wisely. Trusts can also be a great tool for charitable donations. However, trusts are no longer just the overly complicated tools of the wealthy. From taking care of assets that are difficult to liquidate, such as real estate or a business, to providing for a child with special needs, trusts are a straightforward tool that many people should discuss with an estate planning lawyer.

Why Do I Need a Trust?

A trust may be appropriate for anyone with a net worth of over $100,000 and any of the following circumstances:
-Assets that are hard to liquidate, such as real estate, a business or art collection
-The need to put conditions on the beneficiaries' property, such as children who will receive money only after completing college
-The need to care for a disabled child even after he or she turns eighteen
-Children from a previous marriage

Types of Trusts

There are two types of trusts:
-Living trusts, which are funded by the founder of the trust with his or her own assets; and
-Testamentary trusts, which take effect upon the death of the founder who created the trust, that can be funded with assets from the estate or a life insurance policy

The type of trust that you should have depends on the reason for creating the trust. If you are looking to provide for loved ones after your death, a testamentary trust can accomplish your goals. On the other hand, an irrevocable living trust can help pare down your estate to lower estate and gift taxes.

A Lawyer Can Help

Speak with an attorney to determine the type of trust that is right for you. While more and more people are taking advantage of trusts, only an attorney can create an individual trust tailored to your specific needs.

Article provided by Gemma Law Office PC
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