Your personal finances are something that should take up a good amount of your concerns. Financial freedom is something that is very rarely achieved, and once you’ve reached it, you need to protect it to remain financially independent. One of the best ways to do this and help yourself financially when you have achieved freedom and independence is to place your assets in a trust. You may not be too familiar with trusts, but trusts allow for a third party to take control of assets on behalf of beneficiaries. Here are three reasons you should put your assets in a trust.
Protect Your Assets
The first reason that you should put your assets in a trust is to better protect your assets. This is not true for every type of trust and every situation, but sometimes you can protect your assets, or portions thereof, from creditors by placing them in a trust. With an irrevocable trust, you cannot change them once they are established, and the assets in the trust are immediately the property of the beneficiary, not yourself. This means your creditors cannot go after assets in an irrevocable trust promised to someone else.
Another great reason to place your assets in a trust is to help avoid probate court upon your death. A will and testament have to go through public probate court where challenges are allowed, which can cause a lot of money and take a lot of time. Probate court can make inheriting property more complicated for your heirs. A trust, on the other hand, immediately transfers your property, privately and without delay, to your heirs as you have dictated. This can be a great way to save your heirs and beneficiaries time and effort in the probate court system.
Avoid Estate Taxes
The final reason why you should put your assets in a trust is to avoid estate taxes for your heirs when passing down your assets. A revocable trust will not allow your heirs to avoid estate taxes as the assets are only transferred over upon death. With an irrevocable trust, the assets pass without estate tax, up to a huge limit of over 23 million dollars if married. Passing down assets early ahead of time to you can save millions of dollars in estate tax depending on your situation.
Trusts are one of the most underutilized tools for estate planning out there. But trusts could save you and your heirs tons of money. Make sure that you are considering these three benefits of a trust when thinking about your estate.
Check out this article on how to prepare to leave your wealth to your children!