Trusts are one of the most common financial instruments that people use to protect their assets from creditors and taxes while at the same time providing financial security for their family members or other beneficiaries. Yet many people remain confused about exactly what a trust is, whether they need a trust, or how to set one up. Below, we take you through a brief introduction to trusts and how can they be a valuable tool to serve the financial needs of you and your family.
How a Trust is Different From a Will
Wills and trusts are both common estate planning instruments, but there are some key differences to understand. A will is a document that indicates how a person’s assets should be distributed when that person dies. It serves to indicate “who” should receive a person’s property, but it does not provide for legal protection of those assets from tax authorities and creditors, and it also does not place conditions on how the property can be used.
A trust on the other hand can also be used for transferring property to others, and it can make that transfer upon a person’s death (through a testamentary trust) or during their life (through a living trust). But instead of making the transfer directly to a beneficiary, it places the property in the trust itself which is managed by a trustee. This trustee can then distribute assets to beneficiaries in accord with the conditions of the trust. For example, let’s say you want to leave $50,000 to a nephew for his education. With a will, you can only transfer the $50,000 to him directly, and only on your death, and he will be free to spend the $50,000 however he wants. But with a trust, you can provide the $50,000 now or upon your death, and the trustee will see to it that the money is only spent for educational purposes.
The Benefits of Creating a Trust
A trust can be a simple yet powerful and effective way to manage your finances and build a future for your family. There are certain legal formalities that must be met in California for the trust to be legally valid, and with the proper assistance of an experienced estate planning attorney in creating a trust, you can obtain the following benefits:
- Protect your assets from creditors and tax authorities
- Avoid the cost and delay of your assets being distributed through probate court
- Place conditions on your giving to honor your goals and values while preventing waste and improper utilization of funds
- Provide for the financial security and stability of your family members and loved ones both before and after your death
Every person’s financial situation is different, and an experienced estate planning attorney can work with you to examine your financial circumstances, the needs of your beneficiaries, and discuss possible estate planning strategies that best serve your needs while providing for your loved ones.
Create a Trust with the Help of Experienced Estate Planning Attorneys
The estate planning attorneys at The Law Offices of Omar Gastelum and Associates, PLC, can help you create or trust that protects your assets while serving the interests of your beneficiaries in ways that reflects your goals and values. To schedule a consultation to discuss your estate planning needs, call our offices today.