As a new parent, it probably feels like your life is just beginning. After all, this is a step into an entirely new adventure, which brings exciting new responsibilities. Along these lines, wills and trusts are probably one of the last things on your mind. However, developing a trust this early in your child’s life can put them in an advantageous position in the future.
If you are a new parent, here is some information on why you should consider developing a trust.
What is a trust?
The entire purpose of a trust is to ensure your assets reach your beneficiaries in the manner you intended. When you set up your trust, you will allocate specific assets to your beneficiaries, and a third party will administer those assets at the appropriate time. This structure can lessen inheritance taxes and makes settling an estate much more straightforward.
Parties and Assets
A trust involves three key roles: grantor, beneficiary, and trustee. The grantor creates the trust and supplies the assets, the beneficiary receives the assets allocated to them, and the trustee is the person or organization responsible for administering the trust.
Trusts can hold a variety of assets, including cars, real estate, and investment accounts. In the event of your demise, your beneficiaries may not have to go through probate to obtain their inheritance. This could save months of headaches during an already difficult time.
Advantages of a Trust
Developing a trust comes with several advantages. Some of them have already been mentioned, but others are worth exploring in detail in the context of new parenthood.
You Won’t Rush Crucial Decisions
This may be a difficult topic as a new parent, but setting up a trust now helps you avoid making rushed decisions in the future. This facilitates effective planning so you can rest assured knowing your loved ones will be well taken care of.
You Can Strategize Effectively
Setting up a trust early allows you to strategize over time. As the grantor, you specify the terms of the trust. This means you have control over how and when your assets are distributed.
You Can Maintain Privacy
When assets are distributed through a will, they have to go through a process called probate. This is when the deceased’s assets are reviewed, and the inheritors are determined. Depending on the number of assets and parties involved, probate can be a very lengthy process. Additionally, it could be determined that your assets are not allocated in the way you wanted them to be.
If all of that doesn’t sound nightmarish enough, consider that probate is a public process. This means everything you include in your will and how those assets were distributed could become a matter of public record. Fortunately, a trust affords the ability to transfer your assets with discretion.
You Can Save on Time and Taxes
Certain types of trusts can lower the amount of federal and state estate taxes your beneficiaries might have to pay. In addition to estate taxes, certain states require beneficiaries to pay inheritance taxes. However, estate and inheritance taxes are not applicable to everyone or could be inapplicable, depending on how the funds were distributed, so speak with a financial advisor to see if this applies to you.
Hire a Qualified Professional
Are you ready to start developing your trust? If so, OC Wills & Trust Attorneys is ready to help. Our team of estate planning professionals in Orange County, California, will work to make your planning simple and effective, so you can ensure your loved ones receive their inheritance exactly as you intended. Reach out to us today and schedule your complimentary consultation.
