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Debunking the Most Common Myths about Trusts

trust conceptIt’s not uncommon for people to chuckle when they hear the word “trust.” Surely that’s something just for rich people, right? Not necessarily. You don’t have to have piles of accumulated assets for a trust to make sense as part of your estate plan. Trusts have several remarkable benefits that make them powerful financial tools for almost anyone.

Here are five common myths about trusts. Learn how trusts can play a valuable role in your estate planning conversations.

Myth 1: Trusts are only for wealthy people. While Hollywood has done a fine job of using trusts as a tool to sow family discord in countless TV shows and movies, the truth is you don’t have to be “rich” to benefit from a trust. Creating trusts can help people of nearly any financial level achieve specific financial goals. These goals include avoiding probate, transferring assets to future generations, providing for a special needs child, giving gifts to charity, maximizing tax benefits for married couples, and more.

Myth 2: Trusts are expensive to set up. While a trust may have higher initial setup costs than, say, writing a traditional will, the trust can have much lower costs in the long run. Since trusts can help avoid probate, you could be saving thousands, or even tens of thousands, of dollars in court and attorney fees. This means a modest up-front cost to set up your trust could help retain the assets you’ve accumulated and prevent their depletion. You, your estate, and your beneficiaries could save money in the long run.

Myth 3: Trusts make money difficult to access. On the contrary, trusts can offer a layer of protection that both retain wealth and allow access to it when needed. For example, trusts can protect wealth by appointing a trustee to oversee an inheritance until children are old enough to manage the money themselves. Depending on the type of trust created, if you (as the creator of the trust) become incapacitated — mentally or physically — a trust can allow a designated individual to access funds to pay for your care and manage assets on your behalf.

Myth 4: Trusts only make sense for married people and families. While trusts can help couples and families plan for transferring their wealth, single people also can enjoy significant benefits from a trust. In many states that don’t have summary probate laws (that is, laws that allow those with simple estates under a certain asset level to avoid probate), a trust can help someone single avoid the timely and potentially costly probate process. The individual also may want to help ensure that beneficiaries inherit as intended and that their wishes are carried out by someone they know.

Myth 5: Trusts make estate planning more complicated. While creating a trust has a few more moving parts than a simple will does, trusts also simplify many aspects of the estate planning process. In addition to helping avoid probate, trusts can streamline the transfer of assets and designate specific uses for money (like a child’s education). Trusts also protect your estate from the public eye. Wills filed for probate become public records, and anyone can view them. Trusts, on the other hand, are only viewable by the designated trustee(s) and beneficiaries.

If you’re curious about whether a trust is a right solution to help secure your legacy, a conversation with a financial advisor can help you determine how a trust might serve your goals. These experienced financial professionals can review your assets and planning goals, and even coordinate your plans with other trusted advisors like your CPA. Together, you can create a plan to secure your legacy, no matter what stage of life you’re currently in or your current level of assets.

For more information call 770-217-0790 Ex 1 to speak to a Senior Advocate.

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