Have you decided that it is time to create an estate plan, but you're not quite sure what you are doing? Don't assume that all you need to do is create a will because a trust can actually help you protect your assets while you're alive and when they are passed onto others. Here is what you need to know about the benefits of using a trust.
A Trust Protects Inherited Money From Being Taken Away
A common problem that many people have is not understanding the difference between a will and a trust. While both of these estate planning tools have the same end result, a trust is the best way to leave money to children so that the money is protected.
When you leave money to others through a will, that money becomes theirs immediately. However, it also means that the money can be taken away from them unexpectedly or cause problems. If they were to get sued and have a large judgment ruled against them or get divorced, they could lose that money to someone else.
A Trust Prevents an Inheritance From Showing Up as Unexpected Income
Having the money in a trust can also protect that money in other ways. If you are leaving money to a special needs child, leaving the money through a will can have the cash show up as unexpected income and cause them to be ineligible for benefits. If the money is in a trust, that money will not impact their government assistance.
A Trust Protects Assets From Bankruptcy
Any assets inherited through a will are going to belong to the recipient. However, assets that are put into a trust remain part of the trust. This can actually help protect those assets because they do not technically belong to the person receiving them. Putting assets into a trust, such as cash or a home, can prevent those assets from being factored into a bankruptcy filing if they get into financial problems in the future.
A Trust Protects Assets From Long-Term Care Providers
A fear that many people have as they get older is losing their assets to a long-term care provider and not being able to pass along an inheritance. By planning ahead and placing assets into a trust, it can prevent those assets from being taken away from you to pay for long-term care costs. Since those assets belong to a trust and not you as an individual, you will be protected.
Visit a site like https://www.linskylaw.com for more information about estate planning.
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