When it comes to Estate Planning, most people settle for just making a Last Will and Testament. While often overlooked, making a Trust is also extremely beneficial. Trusts can be used to protect your assets and help assist your family down the line. Trusts do not replace Wills, but they can be a better option for passing along money for many families.
A Trust is a fund that allows a third-party to hold on to money in order to pass it on to someone else after the original owner’s death. In this case, the person funding the Trust (which would be you) is known as the settlor, the party that manages the money is the trustee, and the person who will receive the money after you pass away is the beneficiary. So you become the settlor, who pays the trustee money, and all of that money is then given to your beneficiary at the appropriate time.
While you can also leave your loved ones money through a Will, those assets are only taken out at the time of death. The major difference is that a Trust is funded throughout your life. This makes more financial sense for some people – instead of putting money in savings and hoping it will still be there when you’re gone, you periodically put money into the Trust. Some people find that this results in them being able to leave much more money in a Trust than they would have been able to in a Will without actively contributing to it.
Trusts can be made either revocable or irrevocable. A Revocable Trust means that you can alter it while you are still alive, if you need to remove the funds or alter who it is being given to. An Irrevocable Trust is the opposite – after you create it, it becomes owned entirely by the trustee and the original trustor can contribute money towards it. Deciding which Trust is right for you is a conversation to be had between yourself and an experienced lawyer, as it depends on your situation.
There may be some tax benefits to it as well. Your Trust may also dispense with having to go to probate court, which means your beneficiary could receive it sooner and avoid having taxes taken out of it. The settlor can also decide how the beneficiary receives the Trust, whether in one lump sum or scheduled installments. Beyond just passing money on to your family, Trusts can be created for your life insurance policies, real property, and even charitable causes.
Trusts are a great option for those looking for more financially beneficially types of Estate Planning. To learn if one is best for your situation, contact Zamora, Hillman & Villavicencio today. We are your advocates in Miami, helping you navigate uncharted waters!
Zamora, Hillman & Villavicencio
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