It is a cliché by now that the only things certain in life are death and taxes. It is thus ironic that these are also two things that many people do very little preparation for. In the case of preparing for death, even those who die in their old age do so without leaving behind a will that stipulates how to divide their assets. This can thus result in various legal battles in the family, which is a legacy no one wants to leave behind.
One of the best ways to prevent the negative consequences of failing to provide a plan to distribute assets after death is to set up a trust. Though a trust typically carries negative connotations associated with extreme wealth and privilege, it is still possible to set up a trust, so long as you have assets you wish to distribute. The inherent benefit of a trust is that you get to allocate your assets to their intended beneficiaries long before you pass on.
It is easy to find a trust attorney in Utah who will guide you through the process of setting up a trust. Here are some of the advantages of doing so:
Reduce contentions and legal challenges
The primary advantage of setting up a trust, as opposed to writing a will, is that wills can be challenged in court, called probate. This can result in a long, protracted feud among members of your family and other parties, which may also incur additional legal fees for them. Thus, rather than being able to continue in peace even after your death and to focus on your memory, your loved ones will instead be battling each other for their piece of the pie.
While trust can also be challenged legally, it is much more difficult to do so. Furthermore, you are allowed to lay out a plan of how your assets will be distributed, thus reducing the possibility of misunderstanding and infighting.
Greater control over asset distribution
A trust allows you to go into more specific detail about how you plan to distribute your assets to your beneficiaries. For example, you could distribute cash in tranches, rather than as a lump sum, or only after a certain period of time has elapsed.
Most importantly, you have additional options regarding how to distribute your assets. Giving cash and property are not the only ways to distribute your assets. You may opt for special kinds of trusts, such as an education trust fund that specifically earmarks the amount to go towards your beneficiaries’ education costs. Because these are legally binding, this ensures that your wishes can be carried out to the letter even after your death.
The reason trusts are preferred among the wealthy is because assets placed into a trust and gifted to beneficiaries can be exempted from estate taxes, thereby reducing tax liability. However, there are other ways taxes can be avoided through trusts as well. For example, if your beneficiary is a charitable organization, the assets placed under a charitable trust can be considered tax-deductible. This also comes with the knowledge that your former possessions are now being used to support a worthy cause.
Setting up a trust and participating in estate planning is a good way to leave a positive legacy behind. This ensures that there will be some good you can do for others even after you pass on, which is what we all strive for in the end.