Trusts, wills, codicils, executors, guardians — when it comes to getting your affairs in order, this legal jargon can be overwhelming to those not familiar with the process of protecting and distributing their assets after their death. But individuals such as successful business owners with a large amount of assets or specific instructions on how their property needs to be divided should consider creating a trust. Doing so will provide you the peace of mind that your affairs will be handled exactly as you wish.
Smart Business spoke to Curtis Groves of Comerica Bank about the importance of establishing a trust.
What are the common reasons for creating a trust?
Trusts can be created for a number of reasons but are common for individuals who, during or after their life, want to support and run a business, financially support minors, pay for medical bills, fund a scholarship, or protect real estate, cash, securities or property.
Establishing a trust may add additional assurance that your assets will be handled and distributed in a way that you’ve defined. Trusts can also protect your assets after your death from creditors of your trust beneficiaries (including a divorcing spouse of a beneficiary).
But what exactly is a trust?
A trust is a legal document allowing an individual to transfer his or her property to a beneficiary by means of a trustee, who is often a neutral third party such as a financial institution, adviser or legal representative. The trustee has legal power to allocate your assets in whatever way you deem appropriate, as outlined in a legally valid document.
After you move assets into a trust, it is then held until the time at which the grantor specifies that the beneficiary is allowed access to the funds. A grantor can also outline which funds his or her beneficiaries will be able to access.
A trust is more private than a will and allows individuals to maintain fiscal privacy even after they pass on.
