We all need a good estate plan to determine what happens to our property after death. If you don’t have one, the state decides who gets your assets, and it can deplete them, leaving your family with little left over.
Using a will is fine for most people. It can hand over your assets all at once, which will be helpful if your family is in need.
If you have a large estate, however, you may want to find ways to keep it growing. Simply handing your assets down to the next generation can cause your assets to evaporate quickly. By the third or fourth generation in your lineage, there may be nothing left.
Using a trust can help solve this problem. Here are some ways a trust can preserve your estate long into the future.
A Trust Can Continue to Grow
You can think of a trust as a living entity. It can continue to invest, buy and sell property, and so on. Someone must guide the trust’s finances. This person is called the trustee. Choose your trustees wisely, because they control the future of your estate. If the estate is large enough, the trustee can work for the trust full time and pay themselves through the trust.
A Trust Can Control Your Beneficiaries’ Spending
When you pass along your money via a will, that money goes to its recipient all at once. Using a trust, you can put your beneficiaries on an allowance, controlling the money flow.
You can create stipulations with your trust, as well. For instance, you may require all your beneficiaries to maintain a full-time job to receive their allowance.
You can even give your trustee power over allowances. If you have a beneficiary who squanders their money, your trustee can cut them off. They can even help this beneficiary learn to manage their money before reinstating the allowance.
A Trust Can Put Property on a Timer
Your trust can hold on to property before giving it to its intended recipient. You may have property with growth potential, and you can wait until it reaches a certain value before passing it along. You can also postpone passing on assets until your recipient reaches a certain age, obtains a certain degree, and so on.
A Trust Can Designate Money for a Specific Purpose
Let’s say you want to make sure your beneficiaries can stand on their own, independent of the trust. You can use the trust to give them money under certain conditions. For instance, they can receive their share, but only if they use that money to start a business. Then, they cannot receive any more of the trust’s money until that business turns a profit. Rules like these can preserve both your beneficiary’s independence and the money within the trust.
If you need help with wills, trusts, or any other estate planning services, reach out to our firm for help. You can call us at (916) 571-1550 or schedule time with us using our online contact form.