Should you use an asset protection trust?
It is not an easy thing to plan one’s estate. There is a lot of uncertainty in life always, and it is important to keep plans ready in order to ensure that your descendants and assets are all accounted for. It is best to ensure that arrangements are made to account for potential situations where you are unable to make decisions for yourself.
One of the sought-after methods of protecting one’s assets is to opt for a trust. A trust helps you keep control to some extent on how your money is spent. In this article, we offer some understanding into what a trust is and what some of the pros and cons associated with it are.
What is a trust?
An asset pool that is held for the benefit of and use by a beneficiary or a third party is known as a trust. The beneficiary is given assets in a controlled manner by the trustee. Trusts are of two types: those that are established through a will and those that are established when one is still alive (known as ‘living trusts’).
Trusts remain in place until some conditions that have been set earlier are met. For instance, a common way of designing a trust for young children is to permit them full access once they reach the age of eighteen. Therefore, once the child is eighteen, the trust is ended and the inheritance is transferred to them in its entirety.
The creator of the trust is the settlor. For living trusts, the creator can also be the trustee.
Pros and Cons of a Trust
Trusts tend to be more efficient than simply allocating assets through a will. Through a trust, assets are given in a planned, controlled manner. Trusts also help avoid estate taxes and give you the ability to control the manner in which your beneficiary will be receiving the assets. Therefore, a trust can prevent the beneficiary from squandering away the inheritance.
Trusts can also come in use in situations when you are unable to make decisions for yourself. This can be useful to cover medical care and daily expenses.
However, a disadvantage of a trust is that it is more complex to set up in comparison to a will. A lot of time, funding, and effort goes into arranging a trust. It is also difficult to revoke a trust. While one can create a revocable trust, that introduces more complications.
With MDE Patents, you can get more exhaustive information on asset protection trust and get updated advise on same.
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