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What are some benefits of trusts?

Trusts are legal estate vehicles that offer protections for your assets, yourself and your heirs. You can use trusts for a variety of purposes, such as to transfer assets to heirs upon your death or to shelter assets from taxes or creditors during your life. Trusts, when appropriately planned and created, provide numerous benefits.

One of the most commonly discussed benefits of trusts is that they can afford protection against estate taxes. This isn't a concern for everyone as the federal estate tax threshold is fairly high and not all states have estate taxes. If you are worried that your estate will exceed thresholds, you can transfer some assets into a trust to avoid taxes. You can't undo some trust-based decisions, so working with someone knowledgeable to set up a trust right the first time is essential.

Trusts are more private than wills, particularly when it comes to public probate processes. Families often use trusts to transfer assets that they want to keep private, and you can use trusts if you want to be more discrete in how you are dividing assets among heirs or organizations.

Trusts also offer a legal way to provide for instruction, management, and protection of assets if you don't think heirs will be ready or able to handle assets themselves. This is handy for those with minor heirs; you can appoint someone to oversee the trust so that minor children are provided for and are more likely to have assets as they grow older. You can also set up rules in a trust dictating that money is used for expenses you approve of, such as a home purchase or college tuition.

Source: Bankrate, "What trusts can do for you and yours," Cheryl Allebrand, accessed Oct. 23, 2015

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