In estate planning, trusts are a powerful tool that can help individuals achieve their goals of passing down assets to their loved ones. However, many misconceptions can prevent people from taking full advantage of this tool.
We will debunk 10 common misconceptions about trusts, help you understand why they can be a valuable part of your estate plan, and show you how a Houston trusts lawyer can help protect your assets for the future.
Misconception 1: Trusts Are Only for the Wealthy
Many believe trusts are only for the ultra-rich. However, trusts can be beneficial for people of all income levels. A trust can help you protect your assets and ensure they are distributed according to your wishes when the time comes.
Misconception 2: You Can Only Create a Trust After You Die
This is a common myth that prevents many people from taking advantage of trusts. While there are trusts that can be created after you die, this typically requires a probate proceeding.
The truth is that you can create a trust while you are alive, which is known as a living trust. It allows you to maintain control of your assets while alive and ensure they are distributed according to your wishes after you pass away.
Misconception 3: Trusts Are Complicated and Expensive
While it is true that trusts can be complex, they do not have to be expensive.
There are many types of trusts, and depending on your goals or needs, the cost of setting up a trust can avoid the financial and time commitments of a probate proceeding. Additionally, the cost of creating a trust can be outweighed by its financial benefits.
Misconception 4: Trusts Are Only for Avoiding Taxes
While trusts can be useful for reducing estate taxes, this is not their only purpose. Trusts can also protect assets from creditors, ensure they are distributed according to your wishes, avoid probate, and provide for loved ones who cannot manage their finances. Depending on the type of trust that is created, it may also be possible to protect your assets from public benefits such as Medicaid.
Misconception 5: You Lose Control of Your Assets When You Create a Trust
This myth prevents many people from creating trusts.
While it is true that you give up some control when you create a trust, you can still maintain a significant amount of control, particularly when it comes to revocable trusts. You can specify how your assets are managed and distributed, and you can even serve as the trustee if you choose.
Misconception 6: Trusts Are Only for Old People
Trusts can benefit people of all ages. Younger individuals may have more to gain from creating a trust since they have more time to build and protect their assets.
Misconception 7: Trusts Are Only for Those With Children
While trusts can be useful for providing for children after you pass away, they can also be used for various other purposes. For example, you can create a trust to provide for a family member who requires special needs planning, protect assets from creditors, or support a charitable cause.
Misconception 8: Trusts Are Irrevocable
While some trusts are irrevocable, many are not. Revocable trusts allow you to change the trust during your lifetime, which can be useful if your life circumstances change or if you have minor children.
Misconception 9: You Need a Lot of Money to Create a Trust
While some trusts require significant assets, many types of trusts can be created with smaller amounts of money or assets. For example, a testamentary trust can be created in a will and does not require any assets during your lifetime, but this type of trust will be required to go through probate upon your death.
Misconception 10: Trusts Are Only for Estate Planning
While trusts are commonly used in estate planning, they can also be useful for various other purposes.
Other Uses for Trusts
Protecting assets from creditors
Preventing accidentally disinheriting children
Providing for a disabled family member
Supporting a charitable cause
Managing assets for a minor child
Providing for a pet
Trusts can be customized to meet your unique needs and goals. Whether you want to employ asset protection, provide for your loved ones, or support a charitable cause, a trust can help you achieve your goals.
Enlist the Help of a Houston Estate Planning Lawyer to Create Your Trust
Many trust misconceptions can prevent people from using this powerful estate planning tool. However, by understanding the truth about trusts, you can make informed decisions about your estate plan and ensure that your assets are managed and distributed according to your wishes. If you have questions about trusts or want to learn how they can benefit you, Your Legacy Legal Care™ can help. Contact us today to schedule your consultation.
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