Six Benefits of Setting Up a Trust for Your Assets

Don’t leave your legacy up to someone else.

An older couple with their arms around each other look toward their family in a field.
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While the main focus of your wealth-building journey may naturally be building up your wealth, it’s equally important to determine what to do with it once you have it. Whether you’re planning to give it away upon your death or would like to give some away while you’re still alive, planning for either situation can help you ensure your hard-earned wealth is distributed how you’d like, to whom you’d like and when.

A common solution for wealth distribution is a will. A will offers you the opportunity to describe how you would like your assets distributed upon your passing; however, another popular solution is a trust, which allows you to direct the distribution of your wealth while you're still alive. While both are great solutions depending on your goals, a trust can have other benefits you may want to consider.

Below, the financial experts of Kiplinger Advisor Collective outline six additional benefits of trusts and why putting your assets into a trust may be the best solution for you.

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To better control the distribution of wealth
“Trusts are a fantastic way to control the distribution of wealth in the event of incapacitation or death. Trusts are flexible in design and allow the grantor to specify how and when certain assets will be distributed to beneficiaries. This can be exceptionally helpful if the beneficiaries aren't able to make responsible decisions, as in the case of minors or children who require special care.” — Greg Welborn, First Financial Consulting

To keep your assets out of probate
“Probate can take years and is public and costly. A general rule of thumb is to assume that about 10% of your gross value will be used to cover the cost of those exact assets going through probate. That monetary value alone is a great tangible reason why people should have a trust — not to mention the emotional intangible value-add a trust comes with.” — Bob Chitrathorn, Wealth Planning By Bob Chitrathorn of Simplified Wealth Management

To ensure you make the decisions
“Trusts are about trust. Who do you trust more than you to distribute, direct and protect your assets if you become incapacitated or pass away? Surely not your state. You want to avoid costly, public probate and maintain privacy and control for a tax-efficient and transfer-effective handling of your affairs for restful peace.” — Dr. Preston D. Cherry, Concurrent Financial Planning

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To minimize estate tax and provide asset protection
“First, trusts help you avoid the cost, time delays and public nature and disclosure associated with probate. Second, depending on the state that you live in, they can protect assets from recovery for governmental benefits paid during the deceased's lifetime. A trust may help minimize estate tax, and a trust can also provide asset protection and allow family values to continue into the next generation.” — John Goralka, The Goralka Law Firm

To make things easier on your beneficiaries
“Depending on your state of residence, establishing a trust and transferring the title of your assets to the trust might be the only way to avoid your heirs having to go through long and expensive probate before they have access to any holdings. A trust can also help (but not necessarily solve) the issue of ensuring your assets go where you want, to whom you want and when you want.” — Deborah W. Ellis, Ellis Wealth Planning

To obtain peace of mind
“People establish trusts for privacy, asset protection and to avoid probate. Probate can be an expensive and time-consuming process. Trusts can also protect your beneficiaries in the event of illness, disability or death. In other words, trusts can provide peace of mind, which is priceless.” — Marguerita Cheng, Blue Ocean Global Wealth

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The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

Kiplinger Advisor Collective

Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives.