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5 great reasons to consider creating a trust

When it comes to managing your property, there are plenty of ways to structure your portfolio, assets and holdings. Trusts offer many benefits that might not have crossed your mind, so they're worth considering. Here are just a few of the reasons people use these versatile financial vehicles.

1. You can include your own custom stipulations

Worried about whether your spendthrift relatives might blow the inheritance you've worked to build for them? Place the benefits in a trust with special terms defining exactly how they'll be doled out. Since an impartial trustee will manage the assets, there's far less risk of your heirs squandering them.

2. Trusts can do things that wills can't

Wills only go into effect after your death. A living trust, on the other hand, can start working while you're still alive. For instance, many people create them to fulfill specific goals with their assets in the event that they become incapacitated or unable to manage their own affairs.

3. Trusts might help keep the peace

Many estate creators rely on trusts to avoid complicated inheritance squabbles. You can dictate what should happen in specific events, like when you and your spouse (or other primary heir) both die together. In short, you have a greater degree of control.

Trusts also avoid probate, so drawn-out court proceedings are less likely to eat into the assets that you wanted to leave behind. Sidestepping court also means that your affairs remain private, which can make life much easier for your beneficiaries.

4. You can give to charity while still enjoying your assets now

Although you can bequeath possessions to charity using a will, some types of trusts are specifically designed for such purposes. Charitable trusts let you donate property without immediately losing control over it. In other words, you can continue using that house or investment vehicle until the trust terms kick in and it goes to some worthy cause of your choosing.

You may already be familiar with charitable trusts due to their prevalence in the world of higher education. Even if you don't want to donate to a university or college, however, you can use trusts to obtain income tax deductions on your contributions, set up a system where you receive lifelong payments and legally avoid capital gains taxes.

Is a trust right for you?

Trusts have diverse advantages. They come in countless shapes and sizes. Be sure that you understand the distinctions before creating yours, and always work with an estate planning attorney who understands the complex world of trusts.

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