A trust is a legal contract that affords you a comprehensive strategy for managing all of your assets during your lifetime and after you die. With a trust, you can ensure that all of your assets are distributed according to your specific wishes without the public having knowledge of those distributions, because, unlike wills, trusts do not require a probate proceeding before you can distribute the assets in them. Trusts can also help you safeguard a business, minimize estate taxes, and provide for loved ones with terms that are most beneficial to their life situation.

Understanding the benefits of a trust and why you need one is a pivotal step in securing your legacy for your loved ones and interests in the future—and your peace of mind in the here and now.

Benefits of a Trust

Trusts aren’t just for the wealthy or elderly; they are a critical component of estate planning that can offer you substantial benefits over traditional wills. Whatever the size of your estate or the amount of your assets, trusts offer benefits that make them worth considering for people across many income brackets.

1. Avoid the probate process.

One of the most significant benefits of a trust is avoiding the probate process. Probate is the legal process whereby assets are distributed to heirs or beneficiaries of a person who has died only after a lengthy court proceeding where creditors are informed and invited to file claims against estate assets. A probate proceeding is required in most cases whether or not you have a valid will, unless your assets are in a trust. Even with a will, courts will provide the final ruling on the division and distribution of assets to beneficiaries. Probate can be costly, time-consuming, and a matter of public record.

By establishing a trust, you ensure that your assets are distributed quickly and privately, according to your exact wishes, without court intervention. With a trust, your assets are under the ownership of a legal entity, and the appointed trustee—not a probate court—will manage and distribute assets based on your instructions. A trust streamlines the transfer of your assets, ensuring your wishes are carried out efficiently and with discretion.

2. Reduce your estate tax liability.

Trusts can be structured to minimize the estate taxes levied after an individual’s passing. When your assets are transferred into a trust, you are effectively reducing the size of your taxable estate.

Irrevocable trusts will generally not be taxed upon the death of the grantor because they cannot be changed or terminated once created. Other types of trusts can be used to distribute assets in a way that takes advantage of specific tax exemptions. Whatever the particulars of your trust, a trust generally ensures that there is a more efficient transfer of wealth to your beneficiaries. A larger portion of your estate will make it to your beneficiaries with a trust than with other means of asset distribution.

3. Maintain control over your assets.

Trusts allow for an extraordinary level of specificity in how your assets are distributed. You can set conditions for distribution, protect your assets from beneficiaries’ creditors, or manage your business succession smoothly. When you want to ensure that your assets are utilized for specific purposes and not simply your beneficiaries’ discretion, then a trust is the way to go.

4. Have assets available before death.

A living trust can provide you with asset protection and distribution prior to death. A will, on the other hand, has no legal effect until an individual’s passing. Your trust can be set up to provide for your own care and the needs of others without the need for a court-appointed guardian.

5. Enjoy some financial flexibility.

Should you choose to create a revocable trust, you can adjust terms as necessary with amendments. Perhaps your interests change over time or you have a new grandchild whom you would like to see benefit from the trust. Revocable trusts allow you to adapt your estate plans appropriately when you encounter unforeseen life changes.

6. Plan ahead with low maintenance.

Once established, trusts generally require little upkeep. After the terms and conditions are in place and the trust is funded with assets, the trust operates largely independently. The trustee, appointed during setup, is responsible for managing the trust according to the terms set forth. Aside from occasional reviews and updates, day-to-day management is out of your hands.

Life Situations to Consider a Trust

A trust is already a valuable contract for all types of situations, but the benefits of a trust multiply for specific life circumstances. In addition to the general benefits of trusts above, you will want to seriously consider a trust if any of the following apply to you.

Do you have a loved one with a disability?

A special needs trust allows an individual with a physical or mental disability or some chronic ailments to receive income without jeopardizing their ability to receive public assistance like Medicaid, Social Security, or Supplemental Security Income (SSI). When you set up a trust for someone with special needs, you can ensure they receive the care and quality of life they deserve without reducing their eligibility for the public assistance programs they may have come to rely on.

Do you have a loved one with a mental illness or addiction?

If you have concerns about a loved one’s ability to manage their inheritance, a trust can set forth conditions for distribution. For example, you can require that funds be used for treatment or that funds not be disbursed until certain milestones are achieved. You can also designate that money be paid directly to a landlord, educational institution, or medical providers instead of directly to the individual themselves.

Do you have children?

If you have children, you can protect their futures with a trust that can manage and protect their assets until they are mature enough to handle their own financial affairs. You can condition the disbursement of funds on an age minimum, a payment schedule, other parameters like educational requirements, or a combination thereof.

Do you collect valuables?

If you collect art, antiques, or other valuables, trusts are one of the best ways to administer your estate after passing. Trusts can ensure that your collection is handled according to your specific wishes. You also maintain privacy so that your assets are not made public knowledge, and you can potentially reduce estate taxes with a trust. Maintaining your privacy and particular wishes are crucial for ensuring your valuables are as protected as possible.

Do you own a business?

Business owners can use trusts to ensure smooth succession, protect business assets, and maintain business continuity. Trusts can be structured to address the unique needs of your business and provide for your loved ones without disrupting a business’s operations. Trusts will afford greater privacy than an LLC alone. Trusts also offer a measure of protection against creditors.

Find Out Whether a Trust Is Right for You

Every individual’s situation is unique, and while trusts are beneficial in many ways, determining what you need and considering your options can prove tricky. At De Alicante Law Group, we pride ourselves on aiding our clients in navigating their options with estate planning. With Bend, Oregon’s top trust attorney, you can be sure that your assets are protected and properly managed with the best solution for your specific situation.