Are trusts only effective for the wealthy?

You may be considering setting up a trust fund to benefit your loved ones after your death. Like many Detroit residents, you might also be thinking about developing a trust that can be put into effect while you are still alive, especially if you are worried that you might become incapacitated during your later years and unable to make legal decisions. You might, however, have heard from well-meaning friends and family members that trusts are only for the extremely wealthy. This is a common belief, but the truth is that nearly any family can benefit from a well-planned trust.

As the Financial Post explains, you can include a variety of assets or funds in a trust, many of which may be used to generate income to pay your living expenses, or to increase your loved ones’ inheritance. You might include the family home, vacation property and other material assets in a trust, rather than leaving them in a will. One of the many benefits of a trust is lessening the tax burden for the beneficiaries after you have passed on.

This does not necessarily mean that you need to have significant wealth to create a trust. You might wish to leave each of your grandchildren a few thousand dollars each, for example. To ensure that they do not squander their inheritance, you could set up the trust so the funds are distributed after they reach adulthood or graduate from college. You might also designate trust funds to be used for college tuition or to be distributed by a trustee in increments.

Trust planning is not reserved exclusively for the rich, and it can be remarkably flexible to suit any family’s needs. You should take note that the information in this blog is not meant to replace a lawyer’s advice.