There are a lot of misconceptions about Trusts.
- I need to have millions of dollars to need a Trust. – False
- I need to own multiple properties to need a Trust. – False
- Having a Trust makes things way more complicated. – False
Do You Need a Trust?
Let’s start first by explaining the different types of Trusts:
- Revocable Trusts are the most common types of Trusts because anything that goes into the Trust can come out. For example, putting your property into the name of your Revocable Trust does not affect your ability to sell it later on.
- Irrevocable Trusts differ in that what goes into the Trust, can only come out for the benefit of the beneficiary. For example, once you move money or property into an Irrevocable Trust, that money or proceeds from the sale of the property must be used for the benefit of the beneficiary named. Irrevocable Trusts are not as common as Revocable Trusts.
There are many benefits to having a Trust:
- Trusts avoid probate: If your assets are properly handled to include your Trust, your family will not have to deal with the expensive and time-consuming probate process.
- Protects your children’s inheritance: If you have minor children and name them as beneficiaries on your accounts, they will not be able to receive that inheritance until they are 18. In the meantime, those assets are held in court where it is very hard to access and does not grow with inflation.
- Privacy: Property deeds are public records so if you are looking for extra privacy regarding where you live, a Trust would be perfect for you.
- Lowers risk of liability: When you name people as the beneficiary on your accounts, that money is theirs. However, there is a creditor period of one year after the day of death for a creditor to file a claim with the court. If your beneficiaries have spent all the money and a creditor files a claim, it may open them up to pay the debt out of their own pocket. With a Trust, all your assets go into a Trust account, where creditors, taxes, and funeral expenses can all be paid before distributing out to your beneficiaries.
The truth is that Trusts are extremely beneficial and there is no income requirement in order to need one!