A trust is a way to transfer the ownership of an asset from one person to another or from one entity to another. Trusts are used for various purposes, ranging from transferring assets between family members and friends to managing a public office. In fact, trusts can be organized in a variety of ways, but their basic purpose remains the same. They provide a means by which property is controlled and administered by someone other than its owner.
You can consult a will planning attorney San Antonio to learn more about the different types of trusts, how they work, and what their benefits are. Trusts can be established in various ways, by a will, by a trust document, or by a written trust agreement between the owner and the trustee. Regardless of how they are set up, trusts have certain benefits that you should know.
Here are the main benefits of trusts.
- Bypass probate
Probate happens when the legal ownership of property changes. If a person dies without a will or if her will is not valid, then a legal process is triggered to determine who should be the owner of the decedent’s assets. This process is called probate.
In most cases, probate can take up to two years. During this time, the property cannot be sold or transferred. A trust provides an effective alternative way of transferring ownership that does not have to go through this process and does not involve courts.
While probate is performed by the court, trusts are private, which means that they remain a private matter between the owner and the trustee. This can be of great benefit to a person who does not want his/her assets to be probated in the event of death. Trusts help to avoid unnecessary attention from individuals who would take advantage of this situation.
- Tax advantages
The owner of a trust is not liable to income tax on his/her part of the trust’s income. This is because the owner and trustee are legally separate. If a person wanted to use his/her assets in order to pay for his or her personal needs, he or she would not have to worry about paying any income tax.
- Protecting assets from creditors
In the event that a person’s property is being used to pay off debts, a trust can be created to protect other assets. In most cases, creditors cannot touch the trust because it is owned by someone else.
- Control of assets
A trust sets out the terms and conditions under which the trustee will use or manage the property in question. In this way, a person can make sure that his/her assets are used based on their specific wishes.