One option that you have with your estate plan is to use a trust to pass your assets on to your heirs. This is an alternative to simply giving your heirs those financial assets directly.
There are many reasons that you can use a trust, and everyone has a unique situation that they have to consider. Below are a few examples of how these can be beneficial.
Setting aside assets for someone with special needs
If you have an heir with special needs, then a trust can be a good way to pass on the assets without increasing their net worth directly. This can often mean that they still qualify for the benefits that they need and expect to receive, but your inheritance does not have to be spent down first.
Saving the assets for a young heir
You may also have heirs that you feel are too young to inherit the money – such as grandchildren – but you want them to be included in the will. You can use the trust to hold that money until they reach a certain age, and you can even set it up to have different payments at different ages.
Giving the money a specific purpose
Finally, you can use trusts to set aside money for specific things like paying for college tuition. You can also use discretionary trusts, which allow the trustee to have the discretion to decide how the money should be spent. These are ways to guide your heirs if you’re not sure that you would approve of their spending methods, or simply to earmark money for important purposes like a college education.
If you want to use a trust in your estate plan, make sure that you know exactly what legal steps you need to take to set everything up.