When most people decide that it’s time to do their estate planning, they think of one thing: It’s time to write a will. That may be part of the process – and, for a rare few, it may really be all they need. But for most, there are plenty of other options to consider. One is drafting a trust to go along with a will.
One of the main benefits of a trust is that it gives you more control. A will serves mainly to designate who gets your assets. How does a trust go beyond that?
Creating the trust
When you create a trust, you transfer money into it, rather than transferring assets directly to the beneficiary. The trust then “owns” this money, and the trustee is the person you choose to oversee the account.
The trustee doesn’t get the money, though; it still goes to the beneficiary. However, with a trust, you gain more control because you can pick the circumstances under which they hand out those payments. In this way, even though you are not around to do it, you can still manage the trust.
An educational trust
One of the most common examples is an educational trust. For instance, you may want to leave money to your grandchildren to help them with college expenses. But, if you leave it to them in a will, you have no control over whether they use the money for college or to buy a new car.
Instead, you can put the money into an educational trust. The trustee can then take the money out and use it to pay for your grandchildren’s books, tuition, room and board and other such expenses. This ensures your money is used the way you intended.
If they finish school and graduate with money left in the trust, you can arrange for them to receive whatever is remaining – just as they would have with a will. This arrangement can actually serve as an incentive for your grandchildren to seek scholarships, and it guarantees that they can’t simply spend the money prior to getting an education.
The above is just one example. You have many options to choose from when creating a trust, and it is important for you to consider them all carefully.
The current health crisis has highlighted the fact that tomorrow isn’t promised to anyone. Now is the time to make a plan to provide for your family. An experienced estate planning attorney can help you come up with an arrangement that best represents your wishes.