Benefits of Trust Fund
A trust is a fund help by trustees and usually consists of assets. Trust funds are categorized into different groups, for instance revocable trusts are modified through lawful amendments, whereas irrevocable trust funds don’t require modification. With irrevocable trust funds, the grantor is supposed to surrender ownership of all assents. A trust fund has many perks particularly when it comes to estate planning.
1. Family Guidance and Support
Trust funds assure that the grantor’s wishes are fulfilled and the beneficiaries obtain the assets. In other words, the grantor decides who gets how much, and when the money will be dispensed. This is an added advantage for kids who are under adult supervision and are not able to make financial decisions. A grantor can appoint a trustee to monitor the funds carefully to ensure the beneficiaries obtain the funds accordingly, which can lessen the chance of overspending and fund misuse. In most cases, trust is allotted for living expenses or for education purposes.
2. Protection of wealth and assets
Trust funds typically help to protect family assets and wealth until the children are old enough to comprehend basic financial responsibilities. In most cases, parents invest trust funds in bonds and trusts for accruing profits or investment income. Nonetheless, legal documents are of utmost importance in this process to prevent misuse of funds. The beneficiary also has the right to analyze all accounting records pertaining to the trust, including disbursements, liabilities, assets and receipts.
3. Tax benefits
On the other hand, the grantor no longer has access to the funds in an irrevocable trust. In other words, the deceased gave up proprietorship by signing the document, meaning that the assets qualify as gifts and hence are exempted from taxation.
Although there are no significant disadvantages of setting up a trust fund, you will definitely incur Attorney fees.