A Trust — What Can It Do for You?

A toolbox isn’t complete without at least one pair of pliers. Pliers come in all shapes and sizes — needle nose, diagonal, slip joint, and locking, for example. You can use pliers to loosen or tighten a nut, pull a nail out of a wall, or cut a piece of wire. Pliers are versatile tools that can be useful in a variety of situations.

The same notion holds true for a flexible legal arrangement known as a trust. Like pliers, trusts are multipurpose tools that can accomplish various goals. They can be used to benefit different individuals and organizations or to safeguard valuable assets. With a trust, you transfer some or all of your assets to a trustee’s care. The trustee you name will manage your assets as you have instructed. There are a number of reasons for establishing a trust.

Managing Your Assets

Finding the time to manage your assets can be difficult. Then, too, there is always the risk of mental or physical disability as you grow older. And you may not be comfortable leaving substantial assets to beneficiaries who are young or inexperienced in financial matters.

For these reasons, you may want to establish a trust. A trust can help to ensure that your assets are managed in ways that will preserve them for you and your loved ones.

Protecting Assets

A divorce or major lawsuit could significantly reduce or eliminate your children’s inheritance. Placing assets in trust for your child instead of giving them to your child outright may be a sound way to protect the assets. The trust could include “spendthrift” provisions preventing your child from assigning his or her trust interest to creditors.

Giving To Charity

A charitable remainder trust can offer you several benefits, including an immediate federal income-tax deduction and a stream of income for life (or a set number of years). At the end of the trust’s term, all remaining assets pass to the charity. Another type of charitable trust — a charitable lead trust — pays income to a charity and returns the trust’s remaining assets to an individual beneficiary when the trust ends. Both trusts offer tax advantages.

Providing for Special Needs

If you are caring for an adult child or other relative who has special health, education, or other needs, you may be able to set up a trust to provide financial assistance without jeopardizing government benefits. The trustee you choose will execute the terms of the trust and ensure that any special needs are met. The assets placed in the trust are used exclusively to benefit your beneficiary — even after you and other family members are no longer there to help.

Let Us Help

A trust is a flexible financial tool that can be highly useful in a variety of circumstances. To find out if a trust is right for you, please contact us at 804-327-5749