The strategies used for estate planning will vary from one family to another. What works fine for the people living across the street may not be the right approach for you. When it comes to the idea of establishing a family trust, it helps to look closely at how it works and what it can accomplish. Here is some information that will help you decide if this type of trust should be part of your planning.
How Does It Work?
A family trust involves identifying specific assets and placing them into what is known as a revocable trust fund. Effectively, you are giving up the right to manage those assets and making them the property of the trust itself. From that point on, the administrator of the trust will manage the assets, hopefully in a way that causes them to increase in value.
When you pass away, the administrator is charged with following whatever instructions were contained in the founding documents for the trust. That could mean continuing to manage the assets while providing a living allowance for a beneficiary. It could also involve handing over all the assets to the beneficiary if that’s how the trust was structure.
Protecting Loved Ones From Themselves
One of the main reasons to consider a trust as part of your estate planning has to do with how well your loved ones manage their money. If your spouse tends to spend indiscriminately, choosing to provide a specified lump sum payment after your death will provide the funds to settle pressing expenses. After that, the administrator can provide a monthly stipend that makes sure the spouse has money to pay the mortgage, manage the utilities, and purchase food. In this manner you can continue to protect the spouse from those spendthrift habits.
Wanting Some Assets to Avoid the Probate Process
Some wills can be probated quickly while others will require more time. In the interim, no one has access to those assets. Choosing to use a family trust does allow loved ones to receive some benefits from a portion of the estate, according to an attorney for Family Trust in Portage, Michigan. An estate planning professional can help you determine which assets can be placed in the trust, and how many need to be included to get the family through the probate process.
There are several other scenarios that would make the creation of a family trust worth considering. Take the time to go over the pros and cons with someone who knows estate planning well. Discuss possible situations that could arise within the family and discuss how a trust would help keep things simpler. If you believe this addition to your planning would be helpful, rest assured all the details can be worked out without a lot of difficulty.