In thinking about what will happen to your assets when you’re gone, you want to ensure that all family members get exactly what they need and when they need it. A trust can help you do that.
You’ve worked hard for your assets, and you want to ensure that your family can enjoy them once you’re gone. A family trust can help you protect your assets and take care of your heirs once you’re gone.
Through a trust, you have a trustee oversee your assets and transfer ownership to your beneficiaries. The trustee you choose should be someone you trust (thus the title) with your assets, who you feel confident will act in your best interest. The trustee will manage the bank accounts, real estate and other assets in your trust.
Benefits to a Trust
There are several ways a trust can help both you now and your beneficiaries later. While you’re living, it may be beneficial to put all of your assets in a trust, to become “asset poor.” The reasons for doing this are many, but oftentimes if you need to move into a retirement or nursing facility, they will base the amount you pay on your assets. If you are saving your money and real estate for your children, it hardly seems fair to pay for being comfortable in your final days with their money.
In this situation, you assign ownership of the assets to the trust, which leaves you with little. Basing your fees on this, you will pay less for the nursing home services, and may be eligible for funding from the government.
Additionally, if you want to set up a system where your beneficiaries receive a little bit of income over a longer period of time, rather then getting a lump sum at the time of your death, a trust will help you do this. You set up the restrictions for the trust. You might say your grandson can have his portion of your assets, but only upon completion of college, or at age 25. All restrictions are honored by law, so there’s no way around your wishes, even when you’re gone.
The first thing to do is to determine if a family trust is appropriate for you. There are other structures to consider, so choose the one that provides the benefits you need.
Next, select a trustee. Think of who you trust the most to be emotionally impartial in handling your assets. Will this person become upset if he doesn’t get as much as his brother? Can he manage your assets without getting greedy? Will he act in your best interest?
Your trustee might be a family member or friend, or it might be an outside third party. Speak to him about his duties as your trustee. You can even choose more than one to form a sort of Board that must come to agreement on all decisions.
Next, list out your assets. You should decide what to do with each. You may choose to bequeath your real estate to a family member who needs a home, or sell it and divide the profit among your children. You can give all your money to your family, or designate part or all of it to go to the charity of your choice. You determine what to do with your assets in your trust.
It’s a good idea to speak to a lawyer to get ideas about how to disburse payments. If you have grandchildren, you might start an education fund for their college years. And having a lawyer process your trust is essential to ensure that you’ve met all the legal requirements and that the trust is binding.
A trust gives you the peace of mind of knowing that your family will be taken care of, even when you’re not there to take care of them.