There are many ways to provide for your family after you are unable to make decisions, whether you’ve become ill or have passed away. Along with having a will, if you want to preserve your wealth in order to ensure your family is taken care of financially, you can set up a family trust. Here are some of the advantages to setting up a family trust.
When you set up a will, your assets will go into probate before they are distributed to your beneficiaries. The person who has been granted representation of your will, usually a solicitor, will make sure that taxes and any bills that are owed are paid before the assets are distributed. However, if you set up a trust, you don’t have to worry about your assets going through the probate process. This can save time, money and aggravation for your family members.
Provides for Family
Family trusts are usually set up to provide financially for the beneficiaries after the settlor, who is the original owner of the assets, becomes incapacitated or has died. The settlor can stipulate when minor children are to receive their inheritance, and how the assets are to be used for their care until they become of age. They can also ensure that their surviving spouse is taken care of for the rest of their life by stating how their assets are to be used.
Used for Tax Planning
Some people set up family trusts in order to preserve their wealth by using them as a tax planning tool. Inheritance and other taxes can be hefty, but a trust can help your family avoid paying much of those taxes by the way assets are distributed. Experienced wills and probate solicitors also draft trusts and can explain more about the tax advantages to you.
If there is someone in your family who doesn’t handle their money well, the trust you set up can stipulate how they are to receive their inheritance. It can be set up to make sure they have everything they need by paying their bills through the trust. This way, they won’t be able to spend their inheritance frivolously and become broke shortly after receiving their money.
Harder to Contest
Trusts are harder to contest than wills. The only reasons to contest a trust is to claim the settlor was mentally incapacitated when they set it up, or that they were under duress. A will can be contested by people to whom the deceased owed money, by someone who claims the deceased had promised them something from their estate, or if someone claims it was executed incorrectly. Since there are only two reasons that a trust can be contested, the settlor’s assets are better protected by a trust.
A trust can be set up to protect most of your assets, including money and real estate, and distribute them as you see fit. Your spouse, children and grandchildren can be taken care of financially by setting up a family trust.