Those who moved to Chapel Hill as young adults, worked a job, raised a family and are now retired may now be thinking about what will happen to them after they pass on. While it is not exactly pleasant to think about, many people of an older age come to an understanding that they will not live forever, and they have preferences on how they want their possessions and assets passed on to their loved ones when they die.
While one way to pass on assets is through a will, those in the estate planning process may want to consider executing a trust as well. The following are three reasons why trusts can be a good estate planning tool.
Trusts can preserve assets in a way wills cannot
When you execute a will, you may leave specific pieces of property or a certain amount of cash to a chosen heir. However, what if that asset is no longer in your possession when you pass on, or what if your estate does not have the cash to fund that bequest? Your loved one will be out of luck. You cannot pass on what you no longer possess.
However, when you execute a trust, you will also fund that trust. This means that cash, assets and titles to property will be put in the name of the trust or otherwise held by the trust, not by you. If your trust is nonrevocable, this means you can no longer give away, sell or spend these assets. They belong to the trust, not to you. The good thing about this situation is that you can ensure your assets will still be around to pass on to your beneficiaries upon your death.
Trusts can have conditions
Are you worried that your heirs are spendthrifts who will burn through an inheritance in an irresponsible manner? Do you want to see them meet certain milestones such as getting a job, graduating from college or reach a certain age before receiving in an inheritance?
In a trust you can include these conditions, known as “contingencies,” to a loved one’s inheritance. This can help you ensure your bequest is not wasted away and leaves you with the reassurance that your loved one will meet the milestones you would like them to meet even after you are gone.
You decide who is in charge of your trust
Trusts can be either “revocable” or “irrevocable.” A revocable trust is overseen by you as the trustee. You can add assets to the trust or take back assets from the trust as you wish. You can also modify the terms of the trust as you deem appropriate. This may be an attractive option to those who want the benefits of a trust but still want more control over their assets.
Other people find an irrevocable trust to be a better option. In an irrevocable trust someone else is named trustee. You cannot modify the terms of the trust once they are set. Once assets are placed in the trust you cannot take them back. This option may provide more security to those who want to ensure trust assets are not wasted or who simply want someone else to take charge of the process.
Trusts are an attractive option for many in Chapel Hill
There are a lot of good reasons to have a trust besides the three listed here. Many people in the Chapel Hill area find trusts are a good supplement to a will in their estate plan. With a well-rounded estate plan in place, you can ensure that your wishes will be met once you pass away, which can be of great comfort.