A trust is the ideal estate planning tool if you wish to protect your family fortune or keep part of it for future generations. It eliminates the risk and uncertainty of doing so with a will while giving you more control over the future of your estate.
The asset protection capability a trust offers is among its most desirable qualities. You will not have to worry about your assets changing hands when you are gone, and everything will remain on track as you had envisioned. Here is how trusts do this.
A trust is a separate legal entity
A trust legally owns the trust assets. The present and future beneficiaries only enjoy trust proceeds but cannot interfere with the trust assets.
It means that they cannot be sold or transferred to other people. Similarly, creditors cannot seize these assets to recover a debt owed by a beneficiary, nor can they be affected by a divorce. The assets will remain in the trust and serve the purpose defined by the trust agreement.
The trustee owes a fiduciary duty
A trustee is a person or entity who manages the trust and administers its assets. Trustees are legally mandated to serve their role in the best interests of the beneficiaries and the trust at large. With the right trustee, the trust can even grow.
Another added advantage of a trust is that you could save a fortune in probate costs and estate taxes.
Learn more about how trusts work
Trusts are pretty diverse, from special needs and Medicaid trusts to dynasty and living trusts. Therefore, it helps to have a deeper understanding of how trusts work to help you make the right decisions and achieve your estate planning objectives.