Do you consider trusts to be instruments of the wealthy? While it is true that many Hawaii residents of means have trusts to protect and pass their wealth, there are a number of reasons why trusts can also be useful for middle-class families.
Here are 7 of them:
1. Control distribution of assets
You wouldn’t hand over your car keys to a child who has had no proper preparation for driving, and chances are you would not want to hand over all your assets to a teenager either. But if both parents die at the same time, the children would inherit all the assets upon their 18th birthdays. A trust allows you to specify how and when you want your children to inherit.
2. Protect assets from creditors
Placing an inheritance in a trust ensures that those assets are protected from your heir’s—or their spouse’s—creditors. Consider a Lifetime Asset Protection Trust.
3. Protect inheritance from spendthrift heirs
Not everyone is good with money. If your heirs fall into that category, you can use a trust to ensure the assets are not frittered away due to spendthrift behavior.
4. Protect inheritance for children of prior marriage
You can use a trust to both provide for your current spouse and any children from a previous marriage.
5. Provide for a special needs heir
Leaving assets outright to an heir with special needs could disqualify them from receiving important government benefits. Leaving those assets in trust bypasses this potential risk.
6. Avoid probate
Assets can pass to heirs without going through probate by using a trust, saving beneficiaries the time and expense of the probate process. Probate is an expensive, public and unnecessary court process you can keep your family from having to deal with.
7. Protect privacy
Once a will is entered into probate, it becomes public; a trust is a private document that will protect your family’s privacy.
This article is a service of the Law Office of Keoni Souza, LLC, an estate planning law firm in Honolulu, Hawaii. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by contacting our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.
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