A significant task is deciding to hash out a financial plan that protects your assets. You may not believe a trust will work for your situation, but it is something you should revisit.
Trusts are a powerful safeguard for protecting your assets from various life events. To ensure your family remains the top beneficiary of all your hard work, consider utilizing a trust in any financial planning.
What does a trust do?
A trust is a receptacle that holds property. When established, you, as the trustor, establish the rules for what happens to the assets held in the trust. For instance, you may not want the money released until the trustees attain a certain age. The trustees automatically become owners of whatever is in the trust upon your death.
What type of trust protects money?
The two most common trust types are revocable and irrevocable. When you set up a revocable trust, you do so in case you need to retrieve anything you deposit. A revocable trust allows you to move items to and from whenever you want.
An irrevocable trust is the opposite. Once you deposit anything into an irrevocable trust, it is no longer retrievable. The only people who may benefit from an irrevocable trust are those named as trustees and under the conditions you establish. An irrevocable trust guarantees anything you deposit remains safe from events, such as:
- Lawsuit judgments
- Tax seizure
- Debt collection
Since the property you deposit in the trust is no longer yours, a third party cannot try and seize it.
Another benefit to a trust is that it does not go through probate court. Unless you have other conditions, the trustees can access the funds without delay once you die. A trust is a powerful fiduciary tool for all financial and estate planning situations.