Trust Fund Vs. Living Trust
You’ve worked hard to build your assets. Whatever you own is an asset—the list is endless. You worked hard to obtain these assets, so planning to protect them is a pretty brilliant idea.
How do you protect your assets and ensure they go to your loved ones when you pass instead of going through probate for months?
Consider a Trust Fund or a Living Trust.
What is a Trust Fund?
A trust fund is a legal entity that holds and manages assets on behalf of a beneficiary or beneficiaries. It is typically set up by a grantor (the person who establishes the trust) to provide financial benefits or protections for the beneficiary. Trust funds are commonly used for estate planning purposes, to provide for minor children and individuals with special needs, or to control the distribution of assets over time.
Benefits of Trust Fund:
1. Asset Protection: Trust funds can provide some protection for assets from creditors and legal claims because the assets are owned by the trust rather than the beneficiary directly.
2. Control Over Distribution: The grantor can specify conditions for when and how the assets are distributed to the beneficiaries, allowing for controlled and strategic wealth transfer.
3. Privacy: Trust funds can offer privacy since they generally do not go through the probate process, unlike assets left through a will.
Living Trust:
A living trust, also known as a revocable one, is created during the grantor's lifetime to manage assets and provide instructions for distribution upon the grantor's death. The grantor can retain control over the assets during their lifetime and change the trust as needed.
Benefits of Living Trust:
1. Avoidance of Probate: Assets held in a living trust can pass to beneficiaries without going through the probate process, saving time and money and providing privacy.
2. Incapacity Planning: A living trust can manage assets in the event of the grantor's incapacity without needing a court-appointed guardian or conservator.
3. Flexible Control: The grantor can retain control over the trust during their lifetime, make changes as needed, and specify how assets should be managed and distributed after passing.
In summary, trust funds and living trusts are practical tools for managing assets, providing for beneficiaries, and achieving specific estate planning goals.
The choice between the two depends on individual circumstances, goals, and preferences.
As always, this is my personal experience, and I am not an attorney or C.P.A.
It's advisable to consult with a legal or financial professional to determine the most suitable option based on your specific needs.
I hope this was a helpful read!
XOXO,
Stephanie
