There are several types of trusts, each with a unique purpose. However, there are some general circumstances for California families in which establishing a trust may be the best option. If any of the following situations apply to you, you may want to consider establishing a trust.
Protecting your assets
One of the main reasons that people create trusts is to protect their assets from creditors, lawsuits and other legal claims. By transferring ownership of assets to a trust, the assets are not considered to be owned by the individual, which can provide a degree of protection against creditors and other legal claims.
Providing for a disabled family member
A special needs trust gives financial support to individuals who have a physical or mental disability. Their design provides for the individual’s needs without compromising their eligibility for government benefits such as Medicaid or SSI.
Minimizing estate taxes and probate costs
By placing assets in a trust, an individual can often reduce or eliminate the taxes that would otherwise be due on those assets. This can be especially useful for individuals with a high net worth who want to minimize the taxes they pay.
Controlling your assets
Trusts can also be a tool in estate planning. By placing assets in a trust, an individual can control how they will be distributed after death. This can be especially useful for individuals who want to ensure that their assets go to specific beneficiaries, such as children or grandchildren.
Donating to charity
Trusts can also be used for charitable giving. A charitable trust has the purpose of supporting a charitable organization or cause. This trust’s assets are to support the charitable organization, such as funding programs or services.
Creating a trust
Trusts are valuable tools for managing assets and achieving various financial and personal goals. They can be tailored to meet your needs; some can be changed or dissolved if circumstances change. Know the benefits and limitations of trusts and carefully consider whether a trust is the right choice for your situation before creating one.