Managing and Controlling Assets

Trusts provide an avenue to pass wealth to your heirs while retaining some control over when and how they receive those funds. Because they are little understood, trusts are often overlooked as a vehicle for carrying out your wishes for your estate when you die. But they can effectively provide for your loved ones and give you a say in how and when that happens. To illustrate some of the benefits and protections trusts can provide, here is some basic information on what they can help you accomplish.

Establishing a trust account is relatively straightforward. A trust is a legal entity that retains control of assets on behalf of someone else (i.e., the beneficiary). Thus, trusts can be very useful if you want to control how your beneficiary benefits from the funds. Trusts are commonly established for children and grandchildren but can also be set up to allow a trustee to manage your finances if you become incapacitated.

Generally speaking, a trust can provide many benefits, including:

Control how and when the funds in the trust are used.

Trusts allow you to provide instructions and stipulations for how your assets will be distributed and accessed.

For example, grantors can set forth disbursement schedules that stagger when the beneficiary can access the funds. You can instruct the trustee to release a specified amount of funds to your beneficiary at key milestones in his or her life, such as college graduation, reaching a certain age, or having a child. This helps ensure the funds will be used responsibly. Releasing the funds in full once your beneficiary comes of age can be overwhelming, and your beneficiary may have difficulty managing the assets.

Another benefit of trusts is it places the control of assets in the hands of a trustee, not the beneficiary. You can instruct the trustee to invest and manage the assets according to your wishes on your beneficiary's behalf. For example, you can ask the trustee to pay for certain costs, such as college tuition or the down payment on a first home, directly instead of releasing those funds to the beneficiary. You can also give the trustee the discretion to approve the use of the funds, considered on a case-by-case basis or only allow the funds to match funds your beneficiary contributes to large purchases such as a car or a home.

Another important measure of control a trust can give you is to withhold access to the funds if the beneficiary acts against your wishes, develops a substance abuse problem, or gets divorced. In sum, a trust can help you ensure your assets will be used for the right purposes and not wasted, dissipated, or lost in a divorce, which can provide you peace of mind.

Avoid probate.

Probate is a lengthy and expensive process many families have to go through to claim rightful ownership of assets when loved ones die. If properly established, a trust can eliminate the need for probate by automatically transferring assets into the trust account on your death. Probate courts do not oversee trusts. In fact, the trustee manages and administers the trust and can help your loved ones access the assets sooner and with less stress than they would if your estate ended up in probate. No one wants to deal with going to court in the wake of a loved one's death, and paying for attorneys in probate court can result in the depletion of your assets.

Save Money.

In addition to giving you control over your assets when you die, trusts can help you save money and thus preserve the wealth you wish to pass on. By placing your assets in trusts, you can minimize your tax burden in terms of both estate and income taxes. You can also potentially shield your assets from creditors. Working closely with a California estate planning attorney can ensure you leverage all avenues available to organize your trust in a way that minimizes tax liabilities and protects your wealth from court action.

Trusts can provide many benefits that can save you and your loved one's time, money, and stress. But it's important to discuss your plans with both your loved ones and a skilled estate planning attorney to ensure you establish a trust that can honor your wishes when you die.

Do you want to establish a trust? Fresno area estate planning attorney Christopher Martens can help you carefully plan your estate to preserve wealth and protect your loved ones' interests. Attorney Christopher Martens has the skills and knowledge needed to help you ensure your wishes are carried out properly. Serving the Visalia and Fresno areas, The Law Offices of Christopher Martens can provide strategic estate planning guidance. Call our office at 559-967-7386 or email us at [email protected] for a free consultation.