Thinking that you don’t have enough assets to warrant an estate plan is a common belief many people have. If you are one of these people, think about how you get to work, the bank accounts you have, and even the debt you have taken on.
The car you own, the money in your bank account, and your credit card or school debt will have to be dealt with. Your property and assets belong to you, and you have a say in where they go and who receives them. By passing away without a plan in place, the government will decide for you. Beyond that, even the smallest amount of assets could lend itself to disputes and probate litigation.
Trusts Are Gimmicks For Wealthy People
There could be several reasons as to why people have this impression of trusts. Regardless, they are prevalent, and people utilize them to protect their assets and avoid probate.
And the extent to which people misunderstand trusts does not stop there. Even people who believe them to be established estate planning tools dismiss them too quickly. They either think they lose control of all their assets, or the costs associated with them are too high.
When you talk to an attorney—or attend an estate planning workshop—you will quickly discover that both those assertions are false. Each type of trust comes with its own benefits and rules to exercise those benefits. But there are ways to control and use your assets while they are in a trust.
A Different Way To Think About Trusts
Business owners protect their assets by forming entities such as limited liability corporations (LLCs). Think of this as protecting yourself from the front end. In other words, people cannot take your assets through the business. If your business fails, creditors cannot be paid by seizing your home, car, etc.
People create and form LLCs regularly. However, they offer no protection from the back end. If you are in a car accident and get sued or have medical expenses you cannot pay, your assets are at risk.
Your estate planning attorney can advise you on the different types of trusts and the protection they provide. But they are used for asset protection. Whereas an LLC can cover you from the front end, a trust can do the same from the back end.
Law Office of Alexander Sherwood Keenan, PLLC
The Law Office of Alexander Sherwood Keenan helps clients in all different phases of their estate planning journey. If you are ready to begin planning or need to amend a document, contact us to schedule a consultation. For further information about estate planning, ask about our complimentary workshops.