Have Few Assets? Answers to Your Questions About Trusts

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Have Few Assets? Answers to Your Questions About Trusts

Admin • Aug 04, 2021

As you embark on estate planning, you will likely hear about the value of using trusts. But many Americans aren't familiar with trusts and may assume that a trust is a legal tool only for those with a lot more assets than they have. But a trust can protect you and your family, no matter what your financial or personal situation is.

To help you decide whether to - and how to - deploy trusts in your estate plan, discover some answers to your questions about trusts.

Are Trusts Only for the Rich?

Trusts are often associated with wealth because the trust is created to manage or distribute assets. However, the goal of this asset management is to protect the individuals involved - both the grantor who funds the trust and the beneficiaries who receive distributions.

Many of the same problems can befall grantors who have few resources as those with a lot of assets. These problems include suffering a debilitating medical crisis, being away from home or family, caring for family when the person dies, dealing with issues of aging, and providing for family members with special needs. Could you find yourself in any of these situations? If so, a trust can help you.

What Are the Types of Living Trusts?

Generally, living trusts - those that are active during your lifetime - come in two varieties. The first is revocable. A revocable living trust is one that the grantor can alter or abolish at will. Assets in a revocable living trust are still under the control of the trustee or grantor. A revocable living trust generally becomes irrevocable upon the grantor's passing.

Irrevocable trusts, on the other hand, cannot be altered or ended by the grantor. These entities are separate from the grantor and will continue under whatever terms were established - both before and after the person passes away. Because they are separate entities, irrevocable trusts offer tax benefits that revocable trusts do not.

How Can Living Trusts Help You?

Living trusts are an excellent vehicle to help ensure your own financial, medical, or legal affairs will be handled in the event that you cannot do so yourself. Because your assets are in the name of the trust, your appointed successor trustee can use them on your behalf if you are gone or incapacitated. They can pay your bills, arrange for medical care, maintain your home, and provide for your family.

In addition, specialized living trusts help you provide financial support for those with special needs - often without limiting their access to income-based assistance. And a living trust can protect your privacy as well, because assets like your home or accounts are not in your name.

How Can Trusts Help a Small Estate?

When you do pass away, living trusts and testamentary (triggered by the grantor's death) trusts immediately protect your assets and family. Their biggest advantage is that the trust avoids probate. Probate can take months or years to complete, during which your heirs don't have access to their inheritances. The trust bypasses probate and can disburse or manage funds immediately because the trustee is in place.

Trusts also often accomplish specific goals of the deceased person. A spendthrift trust manages the assets of an heir who's bad with money. Incentive trusts help encourage heirs to reach certain goals. Special needs or minors trusts provide for vulnerable family members. And pet trusts provide money to care for your pets after you're gone.

Where Can You Learn More?

Clearly, trusts have many roles to play in your life, no matter how much or how little you have. They can protect you while you're alive and will help you care for those you love when you pass away.

Want to know more about using trusts now and in the future? Start by meeting with the team at Kisner Law Firm. We will work with you to identify the best ways to use a trust to accomplish your goals. Call today to make an appointment.

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