When you create a trust, you place the assets you put into it under the control of someone else. Why, if you can manage them yourself, would you want to do that? After all, you are unlikely to give the password to your bank account to someone you don’t know.
Trustees have a fiduciary duty to manage the trust in the best interests of the beneficiaries, according to the rules you set. While there is the occasional dishonest trustee, most are the sort of people you trust with the money you have in the bank or other financial institutions.
Here are two reasons to consider moving assets into a trust:
- You cannot be sure that you will always be capable
You are fine now and have the mental capacity to make considered financial decisions concerning your assets. Yet what if you were not? A nasty accident involving a blow to the head might damage your brain. A debilitating illness could do the same. That could be tomorrow, or it could be in your old age, or it could never happen, yet you can never be sure.
- Because you cannot trust someone else with the property
As much as you love your daughter, she has a free and easy relationship with money. No matter how much she gets, she has a list of things to spend it on. Hopefully, you will live for years, by which time she will have a more mature attitude. Yet what if you come off your motorcycle tomorrow and die? Putting assets in a trust allows you to regulate how she receives them, to reduce the chance they are gone in a few years.
There are many other reasons to use a trust and several types available to suit different purposes. Finding out more about estate planning options allows you to make sound choices for yourself and your family.