There are a lot of reasons why you might consider creating a trust for your assets. Perhaps you have a large estate, and you want to prevent tax issues. Maybe you’re concerned about the financial habits of a child or grandchild. Sometimes, people want to protect assets for minor children until they are adults. There’s also the issue of the high rate of divorce in modern families. A large inheritance could inspire a spouse to file for divorce to obtain some of your assets after you pass.
You may have created a very specific last will or estate plan that listed only blood relatives as heirs. Their spouses could benefit from your assets, of course, but you didn’t leave anything to them specifically. Unfortunately, unless your heirs have prenuptial agreements that exempt inherited assets from asset division in a divorce, it’s still very possible for a spouse of one of your heirs to walk away with a substantial portion of your estate after a divorce. Creating a trust can help prevent this kind of issue.
Florida doesn’t care who inherited assets, but when
If your assets are not in a trust, they simply become the possession of your heirs after your estate gets handled. In addition to tax issues that could arise, your married heirs’ inheritance will get considered marital property by Georgia courts. Typically, any assets acquired during the marriage are marital property, regardless of whose name they are under. Even if you’re leaving someone a home or family heirlooms, the value of those items could directly impact the rest of the asset division process.
In order to hold on to your vacation house or grandma’s engagement ring, your heir could forfeit substantial marital assets to the unrelated spouse in a divorce. Creating a trust can help prevent this from happening, as the assets may only get used by specific people, potentially only for specific purposes.
Trusts can control exactly how assets get distributed
Instead of providing your heirs with lump sum amounts from your estate, a trust can pay out funds over a specified time period. You can place stipulations on how funds are used, when they can get withdrawn and who can access them. Some people place restrictions on assets, allowing them to pay for college tuition, for example, but not an expensive new car or a vacation. In this kind of situation, your heirs could access funds for household necessities or other uses outlined in your trust.
A trust can ensure that your heirs receive what you intended, without the risk of your assets ending up in someone else’s hands or used for questionable purposes. While you may hope that your grandchildren and children remain married for life, divorce happens in a substantial portion of marriages. A trust can protect your estate and assets from ending up in the hands of someone who is no longer part of your family.
Kevin Tharpe
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