5 Key Benefits To Establishing Trusts
Most people grow up hearing about trust fund babies or thinking that a trust is only for individuals who are rich. This is simply not the case. Establishing trusts can benefit many different people during life and after passing. The way a trust is established can provide many positive features that aren’t involved in a regular estate inheritance. Working with an estate attorney can help you to decide which estate planning options are best for you. Consider these six benefits to establishing a trust with your finances for now or later on.
Avoid Probate
First, what is probate? Probate is a process by which a judge rules on the validity of a will governed by the South Carolina Probate Code under South Carolina Code Section 62-1-201. Under South Carolina law, specifically South Carolina Code Section 62-2-901, a person in possession of a will must deliver it to the probate court within thirty days of the date of death.
This means that after a person passes, a will can be contested through formal court proceedings. Unlike a will, a trust is governed by the South Carolina Trust Code under South Carolina Code Section 62-7-101 et seq., and is subject to strict statutory contest limitations, such as those outlined in South Carolina Code Section 62-7-604, making it far less likely to be successfully contested compared to a probate estate.
Therefore, expensive legal fees, publication notice requirements under South Carolina Code Section 62-3-801, and court delays in the execution of the estate can be avoided. This allows you to make changes and amendments to your estate trust when you’re alive pursuant to South Carolina Code Section 62-7-602, but after passing the trust acts as a vehicle allowing the trustee to execute final wishes while bypassing the probate courts.
Regulated Distribution
There are sometimes concerns about how an individual may utilize inherited finances. The way in which regulations can be set with a trust may be beneficial under the administrative powers granted by South Carolina Code Section 62-7-816.
As a grantor of a trust, there can be regulations where the money is distributed in even, small increments, or it may have restrictions based on age or any number of factors. This may put your mind at ease on how the beneficiaries use the money for years to come.
Charitable Trusts
Not everyone who works with an estate attorney or establishes a trust has children as the beneficiaries. In fact, charitable trusts are a great use for individuals who don’t wish their financial assets to go to distinct individuals, supported by South Carolina Code Section 62-7-405 regarding charitable purposes and enforcement.
Charitable trusts allow grantors to have set money designated towards a charity of choosing during the life of the trust. These, again, can be distributed after passing in one lump sum, or the trust can exist like a living trust that distributes money in a regulated manner.
Taxes
In addition to avoiding probate, trusts help reduce tax liability when money is transferred from the grantor to the beneficiaries or trustee. Assets placed into a trust are less likely to incur taxes. There are specific restrictions and rules that apply to what is taxable and nontaxable with a trust.
A trust can provide a way to avoid or reduce estate taxes because assets and property placed into a trust are not subject to these taxes. For example, with a children’s trust, a grantor can make tax-free monetary gifts from an estate to children or grandchildren up to the annual exclusion amount.
Privacy
A unique benefit of established trust funds is privacy. The probate process is fully open to the public through court filings. However, when individuals choose to bypass the probate process with a trust, the passing of assets can remain private. This means that beneficiaries will not receive public scrutiny or company scrutiny. In fact, assets can remain private even among family members, reducing fighting and remaining contest-resistant.
