A common misconception about trust is that it is a preserve for the rich with massive estates. However, it is not necessarily the case. You could also benefit from having your assets held in a trust. Here is what you need to know.
Having a trust essentially means handing over the control of your assets to a third party. With an irrevocable trust, the legal ownership of the assets changes, meaning that they are no longer considered part of your estate. This arrangement comes with some benefits, as detailed below.
Protecting your assets
Since assets in the trust do not legally belong to you, it means that a creditor cannot repossess them when a beneficiary defaults on debt. Equally, assets held in a trust cannot form part of the marital estate, divided between the separating couple.
The probate process can be time-consuming and expensive, but you can bypass it with a trust. As a result, your beneficiaries can gain access and begin benefiting from the trust assets more quickly instead of having to wait for the conclusion of a court-controlled process.
Saving your estate money
Besides the fees associated with the probate process, your estate can save a considerable amount in estate taxes. These taxes usually depend on the size of the estate – the larger it is, the more the taxes.
With assets in a trust, your taxable estate is significantly reduced, and you will end up paying less than what you would have if the assets were still under your estate.
There is more to establishing an irrevocable trust
Before setting up a trust, you need to align everything with your objectives. Do you have a beneficiary with special needs? Do you intend to bequeath the family wealth to future generations? All these can be done with an irrevocable trust.
All you need to do is settle on the right type of irrevocable trust that will do the job and have it as part of your estate plan.