A well-crafted estate plan often includes a Trust. As flexible and powerful tools, Trusts allow us to gain greater control over how assets pass are passed on to future generations. There are several reasons to create a Trust, specific to each individual’s circumstances.
Often, people establish a Trust as a method of protection. Protecting one’s children, grandchildren, spouses and loved ones are often the catalyst for a Trust. Alternatively, protecting others FROM these loved ones is just as often the Trust goal. Protecting businesses, a loss of income and property is another common Trust goal. Protection from potential future debt or the debt of relatives is another Trust capability.
Trusts can act as a method of providing assets. Provide for School, Health, Education, maintenance and support is a common Trust provision. Disabled or minors can also be provided for in the Trust. Finally, providing until an event is completed is frequently utilized. An example would be providing until education is completed, marriage or age of maturity is reached.
A Trust is an excellent tool to manage assets or income, especially for the benefit of restricted persons such as citizens without income or are receiving government assistance.
Often, Trusts are created to provide for tax savings or provide tax bracket lowering as well as to shift taxes to a specific person. Alternatively, Trusts can eliminate double taxation such as corporate or partnership taxes. Trusts can also separate assets at a later date and protect from future tax debts.
Finally, the most prevalent use of Trusts is to eliminate the need for probate and to minimize estate tax liability.