When it comes to estate planning, many people want the easiest and fastest way to protect their assets for their beneficiaries’ future use. But, estate planning isn’t simple. There are many parts to this process, including creating trusts for any children or other beneficiaries you wish to pass your belongings to.
When people learn this, they often ask, “Why set up a trust when a will already designates who I want my assets to go to?”
The answer is complicated. Simply put, a will and a trust aren’t the same thing. Each holds an important purpose in the estate planning process. Here, we’ll tackle the purpose of a trust to help you better understand your estate planning options. (You can learn more about the purpose of a will here.)
However, please remember that the information below is not intended to be and should not be taken as legal advice. The only way you can learn more about setting up a trust is by contacting attorney Kevin Kenney and his legal team. They are always ready to answer your questions when you call them at 913-671-8008 or schedule an initial consultation online.
What is the Purpose of a Trust?
A trust is a legal document that places your financial assets into the hands of a third party person or organization, known as the trustee. The trustee handles the assets in the trust on behalf of the beneficiary. Typically, a trust is used to allocate assets and funds over time to beneficiaries in a way that a last will and testament cannot.
Beyond this, what is the main purpose of a trust account? It’s designed to keep a trust’s contents private and secure until a beneficiary is able to take responsibility for them all.
A trust can be irrevocable or revocable, meaning the contents may remain in a grantor’s estate or be moved out of their estate. A revocable or living trust can be changed at any time, but the contents are not shielded from creditors. An irrevocable trust is set in stone upon signing and removes the contents from the grantor’s estate, protecting them from creditors and estate taxes.
The purpose of a trust in Kansas City will vary, depending on your desires and preferences for the contents contained within. That’s why it’s important to speak with a wills and estates attorney like Kevin Kenney. They are the best professionals to evaluate your situation and determine which type of trust is best for your and your beneficiaries’ needs.
So, Why Set Up a Trust in Kansas City?
You may be wondering: Why set up a trust for a child? This legal process often requires more steps than a simple will, and the extra time and costs associated can dissuade some parents from this important process.
Everyone’s reasoning for creating a legal trust is different, but here are just a few reasons why you would set up a trust to protect your assets and beneficiaries:
- To minimize estate taxes: One of the biggest reasons why a person would want to set up a trust? It allows you to keep your assets and estates private, in comparison to the public probate process required with a last will and testament. Therefore, your beneficiaries can often avoid certain court fees and estate taxes that they would otherwise pay with a will.
- To avoid probate: As mentioned above, a last will and testament is still subject to the probate process. A trust, however, is not. You can save your beneficiaries the complications of this legal process by placing your assets in a trust prior to your death.
- To protect young or irresponsible beneficiaries: Sometimes, beneficiaries can’t quite be trusted with the funds and assets in their trust. In case you pass away before your beneficiaries are responsible enough to handle these finances, a trust puts your assets in the hands of a trustworthy third party.
- To provide more control of your assets and estate: When you create a trust, it can stay in your control until you die. But, you can still control the allocation of your trust after your death, too. With a will, all property is released to beneficiaries upon the grantor’s death but, with a trust, the grantor can gradually release funds and assets over time (such as when a beneficiary reaches a certain age or meets a certain condition).
Why Do I Need a Trust and a Will?
It’s one of the biggest questions estate lawyers get: “Why do I need a will and a trust? Can’t I just choose one or the other?”
You can, but doing so opens you and your beneficiaries up to complications when it comes time to divide up the assets of your estate.
Remember the key difference between a will and a trust: A last will and testament designates where your assets go, but a trust designates a third party to allocate those assets. Only with a trust can you avoid probate and keep the trusts’ contents private.
In most situations, a will and a trust work hand-in-hand to protect a grantor’s wishes and the contents of their estate. However, they may not be necessary in every single estate planning journey. That’s why it’s so important for you to contact an experienced, local attorney to get the legal guidance you need.
Attorney Kevin Kenney and his team are always ready to guide you through the estate planning process in Kansas City. They can evaluate your personal circumstances and explain what the purpose of a trust is in your situation. For more information, give them a call anytime at 913-671-8008 or schedule an initial consult online.