Families seeking to give their children or grandchildren money should consider a living trust, which is an account where someone’s assets are held for the benefit of another person. The grantor is the person who starts the trust and has control over who his beneficiaries will be as well as how the assets will be distributed. The beneficiaries are those who will receive the trust’s assets. The trustee is the one who will carry out the grantor’s wishes.
One benefit of a trust is that families will avoid the probate process. Another advantage of trust funds is that families are able to use it to fund their children’s college education. With a trust, families can avoid the estate tax since trust funds.
One disadvantage of a trust is the cost of preparation. This is because of a large amount of paperwork that needs to be completed in addition to expensive attorney fees. Sometimes there is no flexibility with a trust depending on whether the trust is revocable or irrevocable. An irrevocable trust cannot be changed, while a revocable trust can.
Process of Setting up a Trust
The first step is to meet with a professional to decide on the type of trust you’ll establish. You need to name the beneficiaries and the trustee of the fund, and also determine which assets will be a part of your trust. If you have a property that he wants to give to the beneficiary, you can transfer the property’s title to the trust fund.
If the beneficiary has special needs and is receiving disability benefits, the grantor should watch how much the beneficiary receives in assets from the trust because the beneficiary could lose his disability benefits.
A person’s children will benefit from a trust fund in amazing ways. Beneficiaries may decide to pay for their college education or they might use the assets from the trust to purchase a home. The person can use the trust fund to start a business, which could help enable financial stability over the long run.
Not Just for the Wealthy
You might think that trust funds are primarily for those who are affluent but this is not always true. Some in the middle-class establish trust funds for various reasons. Trust funds are excellent for giving families a better start in life financially. Contact us today for more information.