One of the most common misconceptions regarding trusts is that they only apply to wealthy families; however, there are numerous benefits to creating a trust fund whether or not you are upper-class. Trusts can help individuals customize and manage their assets and ensure they are properly distributed to beneficiaries after death. For the past thirty-eight years, Catanese and Wells has been associated with the top trust lawyers in Los Angeles thanks to their team’s expert knowledge of estate planning and vigorous commitment to clients. Below, Catanese and Wells Los Angeles trust lawyers will break down some of the top benefits of creating a trust fund.
Tax Benefits
One of the major benefits of a trust is that trusts have the options to be revocable, meaning that they can have the option of being amended after they’re finalized. A revocable trust can be an excellent option for many families who must make changes to a trust fund after its signed; however, this may lead to a lack of tax advantages for benefactors. On the other hand, an irrevocable trust has a number of tax benefits for beneficiaries. When assets have been transferred out of an estate, tax benefits will also be transferred. While contributions to the trust will typically be subject to gift tax requirements, if trustors meet certain conditions, they will ensure the trust assets are protected from estate tax.
Reduce the Likelihood of Will Disputes
When a will is finalized, there is still a possibility that benefactors and other interested parties can challenge it. For this reason, some individuals choose to pursue a trust as it can minimize the possibility of future conflict during the will reading and estate settlement process. Trusts are highly customizable, meaning a trustor can dictate the exact items and monetary sums that will be left to each beneficiary, reducing the likelihood of benefactors arguing over who gets certain items. Unlike a will, a trust offers trustors more control over where their assets will go after their passing, which is highly beneficial for complex family situations or reducing the likelihood of a will contest.
More Privacy Than a Will
As trusts don’t go through the probate process, they offer families greater privacy than wills, which will typically have a public record associated with them. Families who wish to have their assets and asset distribution kept private are often encouraged to pursue trusts; however, it is important to note that there are rare cases where aspects of a trust fund will become public record. If a trust is funded through a pour-over will (a will that dictates that any property that passes through the will at a person’s death be transferred to a trust), then the items that are transferred will become public. It is also worth noting that certain states may require trust items such as securities and real estate be registered and become public record. However, trustors can avoid this by placing assets in the name of a partnership rather than a trustee.