WHAT ARE THE ADVANTAGES TO KEEP ASSETS IN A TRUST FOR MY BENEFICIARIES, INSTEAD OF DISTRIBUTING THEM OUTRIGHT? WHAT ABOUT THE DISADVANTAGES?

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Chester Johnson
5 years ago
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1 WHAT ARE THE ADVANTAGES TO KEEP ASSETS IN A TRUST FOR MY BENEFICIARIES, INSTEAD OF DISTRIBUTING THEM OUTRIGHT? WHAT ABOUT THE DISADVANTAGES? Many people who hope to leave money to loved ones do so by writing a will. However, there is also another alternative that you may wish to consider: the creation of a trust.

Many people who hope to leave money to loved ones do so by writing a will. However, there is also another alternative that you may wish to consider: the creation of a trust.

2 Many people who hope to leave money to loved ones do so by writing a will. However, there is also another alternative that you may wish to consider: the creation of a trust. A trust allows you to designate beneficiaries who can obtain money, property and assets. However, a trust is very different from a will. There are some advantages and some disadvantages associated with keeping assets in a trust instead of distributing the assets outright. An estate planning attorney can provide you with guidance and advice on whether a trust is right for you. UNDERSTANDING TRUSTS Generally, when you give away assets and property either as a gift while you are living or in your will, you have limited control over what happens to the assets and property. The person who receives or inherits the assets takes ownership. 2

The recipient can spend the money or use the assets as he likes, and the property you ve left him could be vulnerable to being lost in a divorce or taken by creditors.

Your heirs have to go through this court process before they can inherit. This can take time and cost money.

3 The recipient can spend the money or use the assets as he likes, and the property you ve left him could be vulnerable to being lost in a divorce or taken by creditors. When the money or other assets are left to someone in a will, this also triggers the probate process. Your heirs have to go through this court process before they can inherit. This can take time and cost money. A will could be challenged during probate, complicating things even further. Information about your private property and assets also becomes court record during the probating of the will, and this public process can adversely impact your privacy and the privacy of your beneficiaries. 3

When assets are kept in a trust for beneficiaries instead of distributed outright via a will or a gifted transfer while you are alive, you solve many of these problems.

4 When assets are kept in a trust for beneficiaries instead of distributed outright via a will or a gifted transfer while you are alive, you solve many of these problems. A trust bifurcates ownership and possession. The trust becomes the owner of the property and assets that you put into it, while the beneficiaries are able to use and benefit from the items that the trust owns. WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF KEEPING ASSETS IN A TRUST People choose to use trusts frequently because of the many benefits they provide. A trust: Makes it possible for estate taxes to be avoided. Because the trust owns the property and not you, your heirs will not inherit in a traditional sense and it is often possible to ensure there will be no death tax assessed on the property held in the trust when you pass away. If you are concerned about estate taxes, it is advisable to speak with an attorney about whether you can prevent these taxes from being assessed by putting your money into a trust. 4

The probate process can be avoided. When the trust owns your property, there is no need for your heirs to go through the probate process after you have passed away.

5 The probate process can be avoided. When the trust owns your property, there is no need for your heirs to go through the probate process after you have passed away. Your beneficiaries can begin benefitting from the trust more quickly without all the legal hoops to jump through that are inherent in the probate process. You also won t have to worry about your personal financial information becoming court record. You have more control over what happens to money and assets. You can establish different kinds of trust, like a spendthrift trust for a beneficiary who tends to be careless with money. You name a trustee to manage the trust for the interest of the beneficiaries and you can set guidelines or restrictions. This helps to ensure that the money and assets in the trust are not wasted or squandered and that the beneficiaries who receive the gifts you have given them benefit from the property and assets, rather than being harmed by it. You can allow beneficiaries to keep government benefits. If you have a disabled beneficiary who is receiving Social Security Disability or who is covered by Medicaid, a large inheritance could result in the loss of government benefits. A special needs trust allows you to leave money to 5

provide a better life for your disabled loved one without interfering with benefits. You can protect the trust assets from creditors and ex-spouses.

6 provide a better life for your disabled loved one without interfering with benefits. You can protect the trust assets from creditors and ex-spouses. You can make sure that the trust assets don t fall into the wrong hands because the ownership is not directly transferred to the beneficiary. All of these advantages mean it makes sense for a lot of people to create a trust. There are disadvantages, in that trusts can be complicated and a trustee is required to manage them. However, with the help of an experienced estate planning lawyer, the advantages should significantly outweigh the downsides and the trust can be used as an important estate planning tool. 6

7 About Singer Pistiner, P.C. In the midst of a family crisis, you may feel like you have nowhere to turn. But there is a solution. At Singer Pistiner, P.C., we will help you to find it. As a small firm, we are able to respond quickly to your needs and concerns. The efficiencies of being a small firm also enable us to provide high-quality legal services at affordable rates. At Singer Pistiner, P.C., in Phoenix, Arizona, we know that divorce is an emotionally and financially taxing experience. That s why we provide you with a simple, quick and personalized approach to family law services where you will deal with one attorney who will handle your case from start to finish. Your Personal Attorneys Throughout the legal process, our lawyers will keep you informed of important developments. We will return your phone calls, answer your questions and address any additional issues that may arise in the course of your case. We will devote all of the time and effort needed to achieve the best possible outcome. Our law firm can take your case to family court, which is a part of the Superior Court of Arizona, or handle it through another avenue of resolution, such as mediation. In addition to divorce, our lawyers handle paternity, prenuptial agreements,grandparents rights, orders of protection, child relocation, and modification and enforcement issues. In any family law case, your best interests are our overriding concern. Our goal is to find the right solution for you in an efficient, timely and affordable manner. OUR FAMILY LAW ATTORNEYS PROUDLY SERVE PHOENIX, GLENDALE, SURPRISE, SCOTTSDALE, TEMPE, CHANDLER AND MESA If you d like to know more about how our Phoenix family law firm handles divorce and other family issues, please feel free to call or send us an to schedule a free initial consultation. Singer Pistiner, P.C N. 71 st St., Suite 100 Scottsdale AZ Phone: Fax: Website: 7

Estate Planning & Administration

Estate Planning & Administration Introduction If you ve been putting off creating an estate plan, then you re missing out on a chance to get some peace of mind. Many of our clients tell us that they feel