You’re a young family who’s still growing. So why would you need a trust? Aren’t those just for wealthy families who are older? Actually, trusts are an important way to take care of your family—at any stage. Here’s why.

Today’s modern lives can be complicated, and many family’s assets, including real estate, securities, and life insurance policies are quite valuable. That’s why, if anything unexpected were to happen you, it’s critical to make sure these assets are fully protected and distributed to your loved ones the way you want them and when you want them.

You can do this with a trust. Here, we’ll explain the advantages of trusts and how they can protect your loved ones financially.

Advantage #1: Trusts Offer A Faster, More Streamlined Way To Distribute Assets To Your Loved Ones

If you pass, you can transfer your money and assets to your loved ones in multiple ways, usually through a revocable trust, a beneficiary designation or a will. With a revocable trust, your assets transfer into the trust throughout your lifetime and are controlled by a “grantor” until you pass away. Usually you’re the grantor, as you’re the person who creates and funds the trust. When you pass away, your “successor trustee” (someone who takes over the management of your trust if you’re dead or incapacitated) passes the assets on to your beneficiaries, per your wishes.

As grantor, while you’re alive, you still have control over your assets and can remove them from the trust, change your beneficiaries, or even add more assets. Assets in a revocable trust are subject to estate taxes because the grantor retains control, and they’re considered part of the estate.

Wills, one the other hand, require a lengthier process, called probate, to transfer an estate to a beneficiary. Under the probate process, an inventory of assets is performed, and an appraisal is made. All debts are discovered and paid. Only then, are remaining funds or property distributed to beneficiaries. In addition, all of this is done under the direction of judge, so probate is part of a public record.

Avoiding probate can make a trust a faster and more private way to transfer your estate.

Advantage #2: A Trust Is Protected From Creditors And Estate Taxes

If you create an irrevocable trust, the assets are removed from your personal estate and are now part of your trust. Assets in an irrevocable trust can’t be pursued by creditors and aren’t subject to estate taxes. After all, they’re not part of your estate anymore.

Advantage #3: A Trust Can Distribute Money At The Right Time

If you pass away, your children might not be ready to inherit your assets. It’s important that they’re mature enough before you give them the responsibility.

Fortunately, when you create a trust, you can structure it so your children must meet a few conditions before they receive their inheritances. For example, you can give them income at younger ages, but hold off on the full inheritance until your children age or achieve certain milestones.

Advantage #4: A Trust Can Ensure A Child With Complex Medical Needs Is Cared For

If you have a child or another loved one with special needs, you can set up a special needs trust that provides for this person, but doesn’t have an impact on government benefits, including Supplemental Security Income or Medicaid. Without a trust, even a small legacy (as little as $2,000) can make your loved one ineligible for federal aid until the money is gone. For someone with complex medical needs who requires constant and life care, losing Medicaid could be devastating.

Advantage #5: A Charitable Trust Allows You To Leave A Legacy

When you’re gone, how do you want to be remembered? If you’re like most people, you want to be remembered as a person who left the world a better place.

A charitable trust lets you leave a legacy by supporting meaningful charities. You can provide for your loved ones first, and then design the trust to leave the remainder of the assets to a designated charity. Remember, your assets are removed from your estate, so you can help lower your estate taxes. This solution might work well for highly appreciated assets, including stocks or real estate.

Remember, anything can happen at any time. That’s why it’s so important to have a trust in place—no matter who you are and how much you own. You can create a trust, at any income level.

When you create a trust, you’re giving your loved ones an incredible gift—order and clarity over your estate and how it’s handled. If you unexpectedly pass away, your family will have a lot on their plate. Ease their burden by creating financial protection that’s streamlined and clear.

*The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.

Lake Road Advisors, a Fee-Only, independent financial planning firm with offices in Corning, NY, Ithaca, NY and Portland, OR works with clients virtually all across the country. Paul Sydlansky, the founder of Lake Road Advisors LLC, has worked in the financial services industry for 20+ years. Prior to founding Lake Road Advisors, Paul worked at Morgan Stanley in Manhattan for 13 years. While at Morgan Stanley, Paul was a senior-level manager within the Institutional Equities Department. In 2018 he was named to Investopedia’s Top 100 Financial Advisors list. Paul received a Bachelor’s degree in Economics from Marist College and holds an MBA from New York University Leonard N. Stern School of Business. Paul is a CERTIFIED FINANCIAL PLANNER™ and a member of the National Association of Personal Financial Advisors (NAPFA) and the XY Planning Network (XYPN).