Trusts are an estate planning tool often used to distribute assets to beneficiaries after the trustee passes away. This generally allows for a more efficient and private transfer of assets than a will.
When it comes to managing your assets and planning for the future, creating a trust may be a beneficial estate planning tool. However, there are many misconceptions surrounding trusts that often lead people astray and deter them from creating one of these legal documents.
Myth 1: Trusts are only for the wealthy
According to a Gallup poll, approximately 46% of Americans have a will, and not many more have also created a trust. One prevalent myth is that trusts are solely for those who possess significant assets or funds, but trusts can benefit people from all walks of life, whether you have a modest savings account or a substantial estate.
Myth 2: Trusts only cover inheritances
Another myth is that trusts are exclusively used for inheritance planning. While trusts are tools for passing on assets, they serve other purposes as well, such as protecting assets, managing investments and providing for specific needs or charitable causes during your lifetime.
Myth 4: Once you create a trust, you lose control
Many think that once you create a trust, you relinquish control over your assets. However, you can structure your trust in a variety of ways, allowing you to maintain control over your assets during your lifetime and specify when and how you want your assets distributed upon your passing.
Myth 5: Trusts are only for the elderly
Some believe that trusts are suitable only for those who have advanced in age. No matter how old you are or your situation in life, a trust can help you protect your assets in case of an unexpected event and even plan for what lies ahead in the future.
Myth 7: You cannot change a trust
Some think that once you establish a trust, you cannot alter the terms. In reality, you can revise or terminate a trust, subject to the terms of the trust document. Life circumstances change, and your trust can adapt to meet your evolving needs.
You should base your decision to make a trust or not on your unique personal and financial goals. As time passes and your life evolves, you may want to revisit your trust to ensure it continues to reflect your wishes.