When people hear talk about setting up a trust, they immediately picture the uber-rich, jet-set crowdfunding their wild children. That’s not quite true. A trust is a legal arrangement where ownership of assets is transferred from the owner to the trust. We’re seeing this type of estate planning tool gain more popularity here in the Raleigh area, and for good reason.
Here are five pros and cons about trusts to consider before creating one:
- Helps avoid probate: Items in a trust don’t go through the probate process and thus are not subject to probate fees, inheritance or estate taxes, and most claims of your creditors. Also, items in the trust can be passed to their intended beneficiaries much faster and easier than if the items have to go through the probate process, which can take over a year.
- More private: Another benefit of trusts not going through the probate process is that it’s not public record. Anything that goes through probate can be looked up by anyone. Trusts are private instruments that can only be accessed by the parties involved.
- Easy to manage if one becomes incapacitated: A trust is usually set up so that if the maker of the trust becomes incapacitated or is unable to take care of himself or herself another person can step in easily to manage the affairs of the trust for the maker.
- Expensive to set up: Trusts are more expensive to set up than a typical will. There are more moving parts to it and ownership of all the assets has to be shifted. It takes a lot of time and attention to detail, but it is usually well worth it for those who choose this estate planning tool.
- Constant management is required: A typical will is drafted, executed, and then not thought about again until its maker dies because a will does not come into effect until the maker’s death. Some trusts can come into effect immediately upon their signing and can entail the management of assets placed in it, so they can take constant review and attention.
It’s great to know one’s options, and we want to help you know them. Contact Thornton Law Firm to see if incorporating a trust into your estate plan is right for you.