When most people hear the word "trust," they think it's something only wealthy families need. But, the truth is, a family trust can be a valuable tool for many people, not just the ultra-rich.

 

Whether you want to protect your assets, plan for your children's future, or avoid a complicated probate process, a family trust could help you gain peace of mind and control over how your legacy is handled.

 

Let's break down what a family trust is, how it works, and who should consider setting one up.

 

What is a family trust?

A family trust is a legal agreement that holds and manages your assets during your lifetime. Then, distributes your assets according to your wishes; after your death.

 

How it typically works:

• You (the grantor) place assets like property, bank accounts, or investments into a trust
• You name a trustee (this could be you while you are alive, and someone else after your death)
• The beneficiaries are your family members or loved ones. They will receive your assets after you pass away.

Tip: Unlike a will, a trust goes into effect while you are still alive and allows your family to avoid probate (the legal process of distributing your estate).

 

The benefits of a family trust

A family trust can:

• Avoid probate and keep your estate private
• Distribute assets quickly after your death
• Control when and how your beneficiaries receive money
• Protect minor children or dependents
• Reduce family conflict by making your wishes clear
• Provide management of your assets if you become incapacitated

 

Who should consider a family trust

You may benefit from a family trust if you:

1. Have minor children

• A trust allows you to set rules for when and how your children inherit money or property. This is especially helpful if they are too young to manage it. 

2. You own your own property or multiple assets

• If you own a home, rental property, land, or valuable possessions, putting them into a family trust can help your heirs avoid probate and receive assets faster.

3. You want to avoid probate court

• Even with a will, your estate could get stuck in probate. This costs time, money, and privacy. A family trust skips probate.

4. You have a blended family or complex family dynamics

• A trust can make sure your assets go to who you want them to.

5. You want to protect a family member with special needs

• A special needs trust can ensure a child or adult dependent is cared for without jeopardizing their access to government benefits.

6. You want to plan for incapacity

• If something happens to you and you are unable to manage your finances, your appointed trustee can step in without the need for court intervention.

 

Is a family trust right for you?

A family trust isn't necessary for everyone. It might not be the best fit if:

• You have minimal assets
• You are only leaving money to one or two people
• You are okay with your estate going through probate

 

How to create a trust

1. Consult an estate planning attorney
2. Choose your trustee and beneficiaries
3. Decide which assets to transfer to the trust
4. Sign and notarize the trust documents
5. Fund the trust by retitling accounts and property

 

Final Thoughts

A family trust is more than a legal document. It's a powerful way to protect the people and values you care about the most. Whether you are just starting to build wealth or thinking about legacy planning, it might be worth exploring.

 

At Walters Financial Wellness, LLC, I help families understand their financial options. If you are unsure whether a trust is right for you, I can walk you through the pros and cons.