They can be incredibly useful tools, and thanks to the publicity, more people may consider using them, but many people misunderstand how trusts work. Let's take a look at — and dispel — three common myths about them.
Are trusts too much work? Are they only for the rich and famous? Do you really need to establish a trust before you die?
Trusts can be very useful tools, but few people understand how trusts work. Daily Financerecently posted an article titled "3 Myths About Trusts That You Can't Afford to Believe." This article examines and dispels three common myths about trusts.
Trusts really are only for rich people. Stop thinking about trust fund babies and the lifestyles of the rich and famous! There are all sorts of trusts that can be used in a variety of situations. These trusts are used frequently by regular folks just like you and me.
Trusts involve too much effort to work effectively. Some people think it is a lot of work to set up a trust. Sure, assets have to be moved into the trust, which usually means changing the formal designation of ownership from one or more individuals to the name of the trust. But creating a trust need not be complicated. As the original article notes, you can implement simple methods like naming the trust as a pay-on-death or transfer-on-death beneficiary to fund the trust without having to take immediate action. These designations keep the trust out of probate. In addition, they save on court costs and delays, but allow you the flexibility to handle your own affairs as long as possible.
You don't need a trust before death. Not so! Trusts can be a part of your financial life even while you are still around and kicking. A trust established while you are alive can manage your assets if you are incapacitated and unable to do so on your own.
Trusts offer a great deal of estate planning flexibility and let you achieve a variety of specific needs. Do not believe the myths! Read more in the original article, then consult your estate planning attorney regarding whether a trust might be beneficial in your own estate planning.
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Reference: Daily Finance (September 20, 2014) "3 Myths About Trusts That You Can't Afford to Believe"