A trust fund is one way to build wealth for your children and grandchildren, but some investors shy away from them because they believe they are only for the rich. In many cases, trusts are a tool for wealthy people to control how their assets are distributed to heirs and organizations, but even those on the lower end of the earning spectrum can benefit.
Trusts are legal entities that can be an important part of estate planning holding property that will go to another person, groups or organizations. Before you decide to set one up, be sure about what you want to accomplish.
Good questions to ask yourself
Before you set up a trust in Maryland, have some answers to these crucial questions:
- What assets do I want to place in the trust?
- Who will be listed as beneficiaries?
- Who will serve as the trustee who will oversee the trust and manage its assets?
- How will the assets be managed?
- How long will the trust exist?
- Is the trust revocable which can be changed or irrevocable which can’t be changed?
Why should you consider setting up a trust fund?
There are various reasons why trusts are popular in estate planning, including:
- Making sure your wishes are realized: If you are worried that family members won’t follow the wishes outlined in your will, a trust administered by a nonpartisan third party can often calm those fears.
- Tax advantages: Trusts can minimize estate taxes allowing more of your wealth to benefit future generations. Creating a charitable trust can safeguard millions of dollars while helping a favorite charity.
- Paying education expenses: Family members can set up trusts for their children and grandchildren to pay for their higher education costs and some living costs afterward.
- Protecting assets: For business owners, trusts can keep certain assets from beneficiaries to keep the company successful and shield the employees who work there.
Seek experienced legal help
When you consider setting up a trust, seeking legal advice is crucial in making sure all Maryland laws are followed. Trusts can be short and simple, or long and complicated. An experienced estate planning attorney will advise you on how to achieve your goals.