Nowadays, many people choose to establish an estate plan to protect their hard-earned assets. Utilizing estate planning tools can help you ensure your assets are distributed to whomever you desire. In addition, it ensures your final wishes are carried out properly after you pass away. When estate planning, you may wonder whether it is better to have an inheritance or a trust fund for your intended beneficiaries. Ultimately, both methods are beneficial, however, it depends on your specific situation. Keep reading to learn about the differences between a trust fund and an inheritance. In addition, contact an experienced Montgomery County Trust Attorney who can help you choose the right financial planning path.
Is a trust fund or an inheritance better for my beneficiaries?
As mentioned above, depending on your situation, your beneficiaries may benefit from a trust fund or an inheritance. Essentially, if your assets do not amount to a large sum, you may be better off establishing an inheritance. Inheritance refers to the assets that an individual leaves to an heir when they die. Typically, inheritances are more cost-effective than a trust which is why many choose to establish a trust fund rather than an inheritance. Although cost-effective, if your assets are significant, it may be more appropriate to create a trust fund. A trust fund is a legal arrangement that allows an individual to place their assets in a special account. These assets will be held for a beneficiary until the grantor (creator of the trust) passes away. Many choose to establish a trust rather than an inheritance because it reduces estate taxes and avoids probate.
When should I consider establishing a trust?
In some cases using a trust is better for beneficiaries. For instance, if your intended heir is a shopaholic and is not responsible when it comes to handling money, an inheritance is not the most suitable option as they can blow through the money fairly quickly. If the money was put into a trust, the trustee makes all the decisions regarding the trust as they follow the guidelines left by the grantor. A beneficiary will not burn through the money as quickly which can help their overall financial security in the long run. Although trusts can be quite expensive, they are well worth the expense as it ensures your hard-earned assets are secure and will be distributed to your intended beneficiaries when you pass away. Ultimately, if your assets equal a significant amount of money, you should establish a trust rather than an inheritance for your beneficiaries.
For more information on trust funds and inheritances, speak with one of our trusted and adept attorneys. Our firm is committed to helping our clients protect their hard-earned assets by utilizing estate planning tools.