When you’re leaving assets to an heir, you don’t have to list those assets in your will. You don’t even have to give them to your heir immediately upon your own passing. An alternative may be to put those assets into a trust, instead.
The exact benefits that you see will depend on the specifics of your situation. But there are a number of common advantages of trusts to keep in mind:
A trust won’t go through probate
You may be trying to keep assets out of probate in order to minimize the state’s involvement. A trust will do that because the trustee simply takes over control of distributing the trust to your heir. Essentially, the assets are leaving your estate when you put them in the trust, not when you pass away.
It can give you control
A trust also allows you to decide how your money is going to be used. Want to make sure that your heir has money to pay for college tuition? Hoping to keep them from spending any of the money until they turn 35 so that they won’t waste it? You get to create the rules for the trust that the trustee has to follow, so you can set it up to do both of these things – and many more.
There can be some tax advantages
In some situations, a trust can get around specific types of taxes. For example, you can give money to an heir directly before you pass, but it may be subject to a gift tax. Putting money into a trust can help you avoid certain types of taxes and make it more lucrative for your heirs.
Once again, the specific advantages will depend on your situation. That’s why it’s so important to know about all the options that you have and the legal steps you can take.