Trusts: Know the Benefits
A trust is one of the best ways to ensure your assets are managed according to your wishes. As a wealth planning tool, trusts offer six key advantages relative to wills. Those include:
Trusts offer more control over the specifics
You set up the rules of the trust – what assets go in it, when, and for whose benefit. You can specify at what age(s) your heirs get trust assets and/or income, and for what purposes.
Trusts can deliver substantial tax advantages
A trust can help improve tax-efficiency at all levels (estate taxes, capital gains taxes, and even income taxes). Specialized trusts can hold your most valuable assets (a business, restricted stock, real estate), so they are out of your estate but can still be used to support you and your spouse, and then your heirs and/or charities after you are gone.
Trusts provide expediency
Assets in a trust bypass probate, which can take a year or longer, especially if those assets are out-of-state.
A trust offers distinct privacy advantages
Trust contents and terms stay private as long as the trust is in existence, which in some states (including Washington) can be longer than a century. By contrast, when a will is reviewed in probate court it becomes publicly available.
By having a trustee, you have an advocate for your intentions
What happens if you become disabled or incapacitated? For assets transferred to a trust, your trustee can step in and manage the assets according to what you have specified.
A trust articulates your legacy
A trust creates a legacy by putting your intent in writing and carrying that intent out over time. As you specify the terms of the trust, you are aligning what you know and what you value with your asset base. In that alignment, you are likely to gain a strong sense of conviction about what is most important to you.
How to Choose a Trustee
One of the most important decisions you’ll face when establishing a trust is the selection of a trustee. So what is a trustee exactly?