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Premier Estate Planning & Family Law Attorneys in Danville, CA

Are trusts only for wealthy people?

On Behalf of | Jul 15, 2021 | Estate Planning

When you hear the phrase “trust-fund kids,” you might assume you need to be rich to use a trust. Yet, trusts can help anyone when estate planning, regardless of how much money you have in the bank.

Trusts can help you protect your assets. You, the settlor, put assets into them for a third party — the trustee– to manage on behalf of the people you choose as beneficiaries.

Trusts can help you protect your assets

Trusts are an excellent way to protect whatever assets you have. Here are some of the ways they might serve you:

  • If you have debts: If you die with debts, the people or organizations you owe money to may be able to claim against your estate. However, they cannot touch assets you hold in trust, making it an excellent way to ensure your assets go to your family, not your creditors.
  • If you are worried about someone’s ability to care for the money you leave them: If you die before your sons or daughters are mature enough to handle their inheritance, a trust can help protect them and the property you leave.  You can set the trust up, so it only pays out when they are older. Or you could have it pass them a smaller amount of money each year, so they cannot squander it all in one go.
  • If you want to protect assets from Medicare: If you move assets into a trust early enough, you can protect them from being counted or taken when evaluating your ability to pay.

There is no one type of trust – there are several, each with specific purposes and nuances. Finding out more about trusts can help you decide if you need them in your estate plan.