When you think about estate planning, you may start with the assumption that having a will is enough to pass your property on after you pass away. The reality is that a will isn’t always enough to protect your assets or prevent certain assets from going into probate.
If you want to prevent conflicts, pass on assets easily, help yourself qualify for Medicaid without having to spend down all your assets or want to be sure your business is protected when you can no longer run it, trusts could help.
Trusts take assets out of your name and assign them to others. They’re held by a third party until the appropriate time comes to pass them on. You can protect assets like your home, your life-insurance policy and others in trusts designed to prevent them from being accessed those who you have not assigned them to. Trusts help prevent disputes, but if there is one, they’re binding in a way that makes them hard to contest.
How can you better protect your estate and investments?
Since a will may not be as protective as you’d like it to be, it’s a good idea to consider setting up trusts in your estate plan. A trust can help protect your property and beneficiaries.
For example, a trust could:
- Help pass your business on and protect it against
- Pass on assets directly to your children from your first or second marriage
- Make sure your grandchildren or children get the assets you’d like them to have
- Protect assets against a quick spenddown
- Reduce the risk of disputes over the estate and the assets within it
There are many kinds of trusts to consider. Some are protective against taxation. Others minimize the risk of trying to collect debts out of the assets in your estate. Additionally, some may help you with your long-term care and Medicaid planning.
With so many types to choose from, it’s important to talk to someone familiar with trusts to make sure you set up the right kind. One or more may be right for your situation.