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What is a Trust & Why Have One?
October 16, 2015
Most people will agree that it’s good – and necessary – to have plans in place to successfully pass a legacy on once we’re gone. A will is often the first vehicle people consider to meet this need. However, a trust is another vehicle that may be a better option.
Learn how & why a trust could work for you
A trust is a relationship in which one person (the trustor) transfers assets to another person (the trustee), who manages those assets on behalf of a third person (the beneficiary).
Trusts are created to give you control of your assets and ensure they’re passed on to future generations or your favorite charities according to your wishes. It basically gives you control over when and to whom your assets are distributed once you’re gone.
If you, as a trustor, have money and property that you wish to provide to a beneficiary, creating a trust can be a good option. Doing so can help you get the most from the assets you wish to transfer.
Helping you to avoid probate
One of the biggest reasons people create trusts is to avoid the time and cost of probate – the process of transferring ownership of your assets to your beneficiaries. Another reason is that probate is a public process, which means the financial details of your life will become part of the public record. Rather than going through the court to settle your assets, which can sometimes take years, the trust automatically (and privately) transfers your assets upon death. Your beneficiaries inherit your assets much faster and according to your plans and wishes. In essence, it can help you keep your assets in control even after your death.
Make it part of your estate planning
A trust can be one of the most powerful components in your estate plan by helping you to:
- Financially provide for your family after your death.
- Protect the inheritances of your heirs.
- Ensure confidentiality of your estate.
- Reduce or eliminate estate taxes.
- Avoid the time and cost of probate.
- Expedite the distribution of assets after you die.
- Ensure philanthropic goals of generosity are met.
- Manage your assets in the event you become incapacitated.
There are many different types of trusts, each with its own goals. Your specific assets and wishes will determine how yours is customized. Keep in mind that choosing the right type of trust can help secure the long-term stability of your assets – and the people or institutions you’d like to receive them. We recommend doing your due diligence by consulting with an experienced estate planning attorney, and seeking the experience of a professional such as an individual at Thrivent Trust Company to help lead the way.
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Thrivent Financial and its representatives and employees cannot provide legal, accounting, or tax advice or services. Work with your Thrivent Financial representative and, as appropriate, your attorney and tax professional for additional information.