Should You Start a Living Trust for Your Children in Arizona?
You want to set up future generations for success, so you're considering starting a living trust for your children in Arizona. Here's what you should know.
Is a living trust necessary for your children? Or should I start a trust? A revocable living trust is not necessary, but it can benefit your children and grandchildren in the future and protect them. It is a great way to make sure that your future generations are protected if you plan to leave assets for them.
But how can you set up a living trust? What mistakes should you avoid? Keep reading and learn more about how estate planning and living trusts work.
The Benefits of Starting a Living Trust
Many people think that revocable living trust are for wealthy families, but this isn't true. A lot of parents are worried about starting a trust too early too because they say, "I'm saving for my child's future". However, this is the perfect way to do so. So who should get a living trust? You can set up a trust for your children if you're not wealthy. There are many benefits to doing so too.
The main benefit is that the money you put into a trust fund will be guaranteed for your children. Trusts are usually released to a person's descendants once the children reach a certain age. Trusts may also be released if you die.
Many people figure that they can give certain assets to their children after they die. But this is not a guaranteed way to provide wealth to your children. This is because assets can be debated by the court and creditors.
Creditors may be able to take these assets away from your children. This leaves them with nothing. But this situation is not possible with a living trust.
Trusts cannot be seized by creditors or anyone else. This is important if you have substantial debts or filed for bankruptcy. Another benefit is that you can specify what you want the trust to be used for.
Suppose you want your child to use their fund to buy a house in the future. You can specify that you want this in your estate planning documents. This ensures that your child can't use the funds for anything except that purpose. While you are still alive, as well, you can continue adding assets to a trust that you would like to pass down to your children.
This is important if don't trust your child's ability to handle money responsibly. A trust is a great way to make sure your descendants have money in the long run too. You can choose to have a trust distributed over a long period.
An estate planning attorney will understand your family dynamics and recommend a estate plan strategy that may help protect your kids against predators (divorce, car accidents, creditors, etc) and against themselves (substance abuse, car accidents, etc).
This is in contrast to your child getting a lump sum at once. This allows you to rest easy knowing that your child will have plenty of money for the foreseeable future. It is also a safeguard that prevents your child from spending all the money at once.
Creating a trust account for child is an important part of your estate planning specially if your child is a minor. A trust account for minors or trust for minors can help the future of your child if something happens to you. Create a child rights trust here today or call and schedule an appointment to talk with our attorney.
Different Types of Trusts
There are many types of trusts but two types you should know about: revocable living trusts and irrevocable trusts. An irrevocable trust is a sure way to make sure your money is protected. You need to be careful when creating the terms of this trust.
Once you create them, you cannot change them. They are permanent once they go into effect. No one else can change the terms either.
It might not make sense to give up your control over the trust. But this is the only sure way to make sure that the assets and money in the trust are protected. A revocable trust allows you to have control over the trust and its terms. Usually an irrevocable trust is created as part of your estate plan for asset protection. The trust assets held in trust will be protected for your children or even for a surviving spouse. You can also add life insurance proceeds to your living trust when you pass, that is a common strategy when minor children is involved. Estate planning attorneys also use this estate plan strategy when blended families are involved.
You can change a revocable living trust as you see fit. But this trust is not as secure as an irrevocable trust. The big downside of this option is that it is not secure against creditors and other people and your entire estate, all your assets, may be at risk.
An estate planning attorney has the job to design a comprehensive estate plan for your and your family. The goal should not only be to avoid probate and keep you out of probate court, the probate process is usually time consuming and also expensive. An Arizona living trust will avoid probate court all together. An successor trustee will manage the trust after you pass away and a personal representative will not be necessary.
What You Need to Know
Creditors may try to seize assets from this trust if they have the chance. This may leave your children with nothing or almost nothing. This is why many people use irrevocable trusts.
Even though you have to give up control over them, they are more secure. They are also guaranteed to be available to your children. Creditors and other people cannot touch an irrevocable living trust if the trust has been properly set up by an estate planning attorney.
This is particularly important if you have a lot of money or very expensive assets in the trust. Hiring an estate planning lawyer will make the choice easier for you. An attorney can explain your different options and which might be best for you and your children.
This will help ensure that your assets are secure. Getting an attorney also makes setting up a trust much easier and less stressful.
The attorney will guide you in how your personal property, your retirement accounts, and any other property left should be added to your trust.
What Else Should You Consider?
If you want to create a separate trust for your children you don't need to put all your life's savings into a trust. Living trust are great because there is no minimum amount you need to add to them.
You can specify how the trust will be funded and who will manage the trust when you're gone as successor trustee. You can also specify what purpose the trust will serve. Your lawyer can help you through all this.
You can also fund your children's trust only after you pass away. This type of asset protection trust is also know as a dynasty trust.
A lawyer can also help you sort through important tax documents and paperwork. This will ensure that the trust is set up exactly how you want it. That will help your remaining assets pass to the next generation without a probate process also.
Setting up a Trust
Setting up a trust is a great way to support your children in the long run. You can specify the terms of the trust and work with a trust and wills attorney to achieve that goal. This ensures that your descendants use the trust how you would prefer.
We will be pleased to offer you a free consultation to talk about your living trust and your estate planning goals. Call (480) 565-8020 or click here to schedule your free estate planning consultation today.