As a part of your estate plan, you may have decided to set aside money for your child to inherit. You may want to pass on property or other non-liquid assets, too, which is something you know will help support your child in the future.
If you haven’t considered the option of setting up a trust, now is a good time to do so. Adding a trust to your estate plan can provide better protection and make sure that the assets you pass on are used correctly in the future.
Why set up a trust for your child?
There are a few reasons why you should consider setting up a trust for your child.
The first reason is that certain kinds of trusts can protect the money or assets from taxation and creditors. For example, if you create a trust and add $100,000 to it today, that trust will help prevent the money from being taken for debts or being seen as a part of your estate when you seek out Medicaid later in life. In those ways, the trust is protective of you and helps protect the assets that you want to pass to your child.
Another way that a trust is beneficial is because you control how the trust pays out. You select the terms, which means that you set up the trust to pay out monthly for many years or all at once during a specific event in your child’s lie.
A third reason that trusts are beneficial is because certain kinds protect assets against bankruptcy. Whether you go into bankruptcy or your child does later in life, the assets in the trust are generally off-limits.
Finally, if your child gets married and divorces, the trust will protect the inheritance. Similarly, if you add assets to a trust, those assets may not be part of your marital assets.
Trusts have many benefits, so it’s time to consider them
If you want to pass on assets, it’s valuable to look into doing so with a trust. A trust is beneficial in many ways, which you’ll learn more about as you discuss your legal options for passing on an inheritance.