Many people have a misconception that trusts are only for the wealthy. In truth, anyone can benefit from using this estate-planning tool if he or she has a home or business or just wants to have better control over how his or her assets are inherited. When viewed in this light, the number of Washington, DC, residents who would benefit from trusts is higher than most people think.
In addition to the estate tax benefits of a trust, this document allows its creator to specify when and how an heir will receive distributions from it. For example, a parent may be concerned that if his or her children inherit everything outright, they will not receive the full benefit of the assets due to estate taxes or may spend it all too quickly. A trust would allow that parent to instruct the trustee to make distributions at certain times, such as upon graduation from college, upon marriage or even at certain ages.
A trust can also keep certain assets from going through probate, which can be costly and cause a delay in when an heir has access to his or her inheritance. Ordinarily, a trust will also prevent creditors and others from gaining access to the assets. This is true not only for an heir but for the creator of the trust as well, if all of his or her assets are placed into a living trust that is executed during that person's lifetime.
Numerous types of trusts can be used, depending on the needs and desires of a Washington, DC, resident. Their terms are flexible, which makes them a popular choice in estate planning. Choosing the type of trust that will provide an individual with the maximum benefits possible can be challenging. Therefore, it may be beneficial to consult with someone familiar with the types of trusts and the advantages and disadvantages of each to ensure that the wishes of the individual are carried out in the way he or she envisions.
Source: money.cnn.com, "Get ahead of your estate planning", Oct. 11, 2014