MANY PEOPLE ASSUME THAT TRUSTS are only for the very wealthy. That's
not the case. "Trusts are tools that give you very specific
control over how your wealth is used and protected, no matter how much
money you have," says Kevin Hindman, managing director at Bank of
America. They can be set up while you're alive to provide for the
management of assets in the event that you or a loved one becomes
incapacitated—a valid concern given our increasing life spans and the
prevalence of conditions like Alzheimer's. But trusts are also useful
in helping ensure that your money is distributed as you wish after you
are gone. Here are three potential benefits to consider.
"Trusts are tools
that give you very specific control over how your wealth is used and
protected, no matter how much money you have."—
Managing Director at Bank of America
More control. You can use a trust to set rules or conditions
about when and how your beneficiaries will receive their inheritance.
For instance, if you prefer that your son complete a professional
degree or pursue a career rather than buy sports cars, you could
establish a trust that sets a specific age or milestone, such as
graduating from law school or turning 30, before the money is made
available. Trusts can also help you reach charitable goals or improve
A measure of protection. Trusts can help ensure that your
children, grandchildren or other loved ones receive their inheritance
if you divorce or remarry. They can also help shield assets if you or
your heirs are in professions that come with a high risk of
Investment guidance. A trust allows you to designate a
professional money manager, so if loved ones are not able to or can no
longer handle investments, family property or a business, they may be
protected from costly mistakes. The same goes for heirs who are too
young to invest and manage an inheritance.
3 Questions to Ask Your Advisor
- How can a trust help me see to it that everyone in our family is treated fairly?
- Can a trust help me protect the interests of a loved one who has Alzheimer's?
- What should I look for in a trustee?