Benefits of Trust
Trusts are very important and should be considered when planning an estate as they help when you intend to leave your minor children assets or money. One benefit of trust is that it ensures that money being managed by a trustee is set aside so that it is made available to your children when they reach a specified age. Trusts are simple and easy to set up, and they have a lot of benefits.
Protecting your estate
One benefit of a trust is that it helps you to protect your estate even after somebody else takes ownership over it. For example, supposing you want to leave $1,000,000 to your son, but you know very well how much of a spendthrift he is. Before long, he will have spent the entire money. In such a situation, a trust will enable you to parcel out money to him as you see fit. You will set the trust fund such he is given a little bit of the money annually for a specified duration. According to the trust, he will eventually be given the lump sum when he reaches an age you think he will be mature enough to control his spending habits and desires. You can as well add conditions to your trust such that money is only dispersed when the beneficiary meets some criteria.
Avoiding taxes
The other benefit of a trust is that it enables you to avoid taxes. An example of a tax saving trust is the irrevocable life insurance trust. After your death, the proceeds of your life insurance policy, that is, the death benefit amount, are added into your estate. This might turn your estate that was not subject to federal taxes into one that is required to write a check to IRS! After setting up a trust and you have life insurance, your beneficiaries or beneficiary will still get proceeds from your policy upon your death. The good thing is estate taxes will no longer be a problem.
Provides funds for education
Another benefit of a trust is that it makes money available to your relatives, grand children, children or even nonrelatives, for example, your employees’ children, for educational purposes. You can fund a trust that parcels out money to be used for educational purposes with a policy stating that no-school, no-money.
Trusts benefit charities and institutions
You can set up trusts that help charities financially. The trusts will give the charities money annually while you are still alive. Upon your death, the amount of funding increases. Alternatively, you can set up a charity trust that makes regular payments to the institutions or charities for a specified period of time, but eventually, you are given back what is left, and in case you die, your next of kin benefits.
Assurance of privacy
Another benefit of a trust is that it does not have to be filed publicly with any government agency, including the Chief Registrar of Wills. The public cannot, therefore, find out how you have distributed your estate. Only the beneficiaries of a trust get to know the amount of income generated by a trust. It’s only the trustee that knows the extent of the assets included in the trust.