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Arizona residents may have misconceptions about trusts

On Behalf of | Sep 22, 2017 | trusts

Forming a trust can be a great way to help manage assets and make sure they are legally distributed to the right parties when one passes away. However, residents may be weary of using a trust due to a few common misconceptions. A financial planning expert debunked five major misconceptions regarding trusts.

One misconception is that people with smaller estates do not need to bother creating a trust. The truth is that trusts can be beneficial no matter how small the estate. A trust can ensure that assets are properly managed and protected from irresponsible parties.

Trusts are also not as inflexible as people think. If one has a revocable trust, they have the ability to make changes to the trust for as long as they are alive. Keep in mind that not all trusts offer protection from creditors.

Before creating a trust, talk to a qualified attorney about asset protection. One may also be concerned with how a trust can affect estate and income taxes. Tax laws at the time of the grantor’s passing will determine whether taxes will be affected. Many people are reluctant to start a trust because they think they have to ask a family member or friend to manage the trust and distribute assets as trustee. However, this is not the case.

One can easily have a professional named as trustee or co-trustee. They can even put provisions in the trust to dismiss the professional trustee, if they are not doing what they should be doing.

Trusts are a useful way to efficiently distribute assets when one dies. If they are interested in creating a trust, they may require the assistance of a qualified estate-planning attorney.

Source: WMUR 9, “Money Matters: Five misconceptions about trusts,” Marc Hebert, Sept. 14, 2017