The Pros and Cons of Trusts
A Trust is one of the fiduciary relationships or agreements that allows you to pass on your wealth and assets to your loved ones after you are gone and avoid any financial crisis. Before you decide what type of estate planning option is the right one for you and your family, you need to understand the advantages and disadvantages of living trusts. Let’s take a closer look at the pros and cons of trusts to help you pick a plan that’s right for you.
Advantages of Trusts
Generally, the advantages of trusts outweigh the disadvantages by far. Here are some of the benefits of choosing a trust for your estate plan:
This is probably the most significant advantage that a trust can provide you. Probate is the court process that ensures that all your assets are divided according to the law or the details of your will when you die. It also ensures that your debts are paid. The downside of probate is that it can be an expensive process. If you own multiple properties, your family can be overloaded with high probate fees.
In addition to the cost, probate can take a long time to complete. In many cases, your state’s law can require you to allow creditors to file a claim against the estate for up to twelve months. Probate is also a public process, meaning that your beneficiary’s inheritance becomes public. Therefore, they can be subject to creditor collection. Most trusts allow you to avoid probate entirely, eliminating all of the issues mentioned above.
Privacy in Personal and Financial Matters
Since trust allows you to avoid probate altogether, you don’t have to make your personal and financial information public. Most transfers and payments take place in private offices rather than public courts. This is an added benefit of choosing trust over a will for your asset distribution.
Control of the Finances
When you create a living trust, you can keep your family safe and secure their future even after you’ve passed away. Trust allows you to delay the distribution of assets until your children are responsible age, without the risk of your money falling into the wrong hands. You can make sure that the unique needs of your loved ones are also taken care of with your benefits.
For these reasons alone, you should consider drafting a living trust when your children are still young.
Prevent Guardianship or Conservatorship
A guardianship or conservatorship happens when the court appoints a third party to manage your finances and assets. Trusts allow you to take those matters into your own hands by naming your trustees in advance.
Disadvantages of Trusts
With all these advantages, there are still some disadvantages to trusts.
While the disadvantages are few, one is additional paperwork that you need to manage regularly. However, spending some time and effort into keeping track is worth more than the time and risk of probate.
Since it’s pretty tricky to challenge trusts, you need to make sure that all the information you put down is accurate. If not, your family can have a big headache to deal with when you pass away.
Contact Derryberry & Associates to Schedule a Free Consultation
If you need help deciding whether a trust is the right option for your family, we’re here to help. Contact Derryberry & Associates today to schedule a free consultation with our Palmdale probate lawyers.