If you plan to pass down the family wealth to future generations, you should ensure your estate plan documents are aligned with your objectives. Otherwise, the family fortune may not trickle down to your descendants as you had planned.
How a trust can help
Trusts are a crucial estate planning tool that enhance your will in several ways. For starters, an irrevocable trust is separate from its creator and beneficiaries. This means that assets in the trust are owned and belong to the Trustee on behalf of the trust beneficiary. In the event that a beneficiary of an irrevocable trust defaults on debt, creditors cannot come after trust assets since they do not legally belong to the defaulter. Similarly, a beneficiary cannot transfer, misappropriate or sell trust assets. An irrevocable trust is also separate from its creator for tax purposes. Watch for more on the tax pros and cons of irrevocable trusts in a future blog.
As the trust creator, you also get more control over what happens to the trust assets by specifying its terms and conditions. For instance, you can set up an education trust to cater to the future educational expenses of your descendants. There are also special kinds of trusts designed to preserve family wealth.
Understand how trusts work
Learning more about trusts and how you can incorporate them into your estate plans will help you plan for the future of your family legacy. Should you have concerns or legal questions about the trust that will do the job, it is advisable to consider seeking informed guidance on the options at your disposal.