Planning your financial future

No one disputes the importance of planning for your financial future and end-of-life. You want to make sure that your family is cared for when you shuffle off this mortal coil and leave them without your income and potentially saddled with a mortgage and other debts. The problem is that there are a lot of options to sift through. The process can be confusing, expensive, and even unsuccessful if you choose poorly. After all, you don't want to put all of your savings into high-risk stocks only to lose every cent on a market downturn. The point is that you have to take the time to understand the form of protection you choose. Here are some benefits and potential downsides to choosing family trusts.

PRO: Asset Protection

Trusts may provide the most beneficial means of protecting major assets because you can place them in the temporary care (and control) of a third party, or trustee, until such time as you elect to pass assets along to loved ones. In this way you will protect assets from third party claimants like creditors or other family members. If, for example, you want to protect your home from business debt, you can place it in a family home trust and out of the reach of anyone attempting to collect on money owed by your business.

PRO: Structured Gifting

Unlike some other options, a trust allows you to gift assets at certain times. You can leave a home or other assets to children at the time of your death, you can designate funds to be given when kids reach the age of adulthood or start school, or you could grant gifts at specific ages or dates (such as annually on birthdays).

PRO: Ensured Gifting

When you name beneficiaries through a trust structure, you'll ensure that assets go only to those named, without having to go through probate or risk being contested like with a will.

CON: Potential Costs

Any kind of asset protection is going to cost you money, and family trusts are no exception. You just have to be smart about how you set them up. If at all possible, make sure you're not overpaying or suffering unnecessary, ongoing costs.

CON: Penalties for Shams

If you abuse a trust by placing items in it that are ostensibly still yours, the structure could be ruled a sham. This could undo the time and expense you've put into planning your trust, put your assets at risk, and potentially lead to penalties.

CON: Trustee Control

When you create a trust, you also designate a trustee to manage it. You can leave instructions for how this is to be done, but it's important that you choose a capable and trustworthy trustee (yourself and partner to begin with, but often in your golden years a Lawyer or Trustee Company may make more sense). Just remember that the trustee is responsible for acting on behalf of the beneficiaries when making decisions regarding the trust, and that may run contrary to your interests.

So why not learn more and register with TrustUs today.

After all, it's in your hands.