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3 reasons to consider a trust in your estate planning

Trusts are often one of the most misunderstood elements of the estate planning process. Many people assume trusts are just a fancier form of a will, but trusts don't usually replace a will and they are used to meet different goals in the estate planning process. Here are three reasons you might want to consider a trust.

First, trusts help you safeguard your assets now and in the future. Many people immediately think of sheltering assets in a trust to avoid paying taxes, but it's not quite that simple. Yes, trusts do provide for some tax benefits, but you or your heirs might still have some tax burdens related to assets associated with a trust. To fully understand what taxes may or may not be required, it's important to work with an experienced estate law professional. Trusts do also provide some shielding against creditors; again, the benefits are situational, so speak to an attorney to find out more about them.

Another reason for a trust is to ensure your wishes regarding assets are followed. A trust lets you set up rules for the disbursement of funds; you might use a trust to ensure your assets are given to charity. You might also set up a trust and require that assets be used to fund a child's education.

Finally, a reason to set up a trust is to protect a minor child or other independent from himself or herself. For example, you can set up a special needs trust to provide for an adult child who is not capable of making financial decisions. You could also safeguard an inheritance against use by guardians of minor children with a trust.

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