It is a common misconception that only the very wealthy need a Trust. A Trust is just one of many estate planning tools to consider when preparing an estate plan.
Simply put, a Trust is an agreement in which the Settlor, the person creating the Trust, transfers their property to a third party, a trustee, to be held for and distributed to a beneficiary. A beneficiary can be a person, a business or a charitable organization.
The main reason to have a Trust is to try to minimize any tax liabilities associated with an estate, to keep your financial affairs private and/or to avoid probate.
One advantage to a Trust is that, in most cases, you do not need to go through probate, which is the process in which the court oversees the administration of an estate. Although probate is not necessarily as difficult a process as people tend to think, probate can be time-consuming and costly, depending on whether you have an estate plan, how well the plan is prepared and the complexity of your estate.
Privacy is also another consideration in having a Trust. Probate is administered by the court, and therefore, public. On the other hand, a Trust is a private document, which can be managed and distributed in private.
A Trust is also an effective estate planning tool to reduce estate or gift taxes. Depending on the amount of assets in your estate, there may be estate taxes due after your death. A Trust can help minimize or delay payment of estate or gift taxes.
Depending on your particular situation, a Trust may be the right estate planning tool to meet your particular needs.
If you would like to work with one of our experienced Attorneys, please call OWENS & PERKINS at (480) 630-2464 to schedule your free 30-minute consultation.