You’ve heard the stereotype: the young adult, Denver trust fund baby that spends his days snowboarding, partying, hanging out…anything but working for a living…all because he is independently wealthy. Perhaps, thanks to the generosity of his, Mom, Dad, Grandpa, Auntie, etc.
While this may be a reality for some, establishing a trust is not only for wealthy people. A trust is simply a legal way to provide financial security or a financial benefit for a loved one, charity or other organization. While the terms of the trust can be drafted to comport with the wishes of the client, in some cases, trust beneficiaries must wait until they have reached a certain age to receive money from the trust. When creating a trust, you can also specify that certain conditions be met, such as reaching a certain age, college education/graduation, first home purchase or marriage, before a beneficiary can start to receive money from the trust. In the case of a trust fund set up for an organization, the funds may be transferred when and how you specify them.
Alternative to a Will
Trusts are a way to control how much and how often your loved ones receive money that you have worked hard to earn. This is especially helpful if you feel the funds would be used irresponsibly if received all at once, such as leaving assets to a loved one outright in a will. You can let your beneficiaries receive payments monthly, yearly or any way you see fit.
One way to establish a trust is to establish an irrevocable trust. You set up this type of trust to include cash, property and other assets, identify who you want to receive funds (beneficiaries) and then determine how and when they will receive payments. Being irrevocable, you cannot change it because the assets you include in the trust are not owned by you anymore. Instead, these assets are controlled by a trustee appointed by you. As such, these assets are typically not included in your estate for estate tax purposes.
Millions Not Needed
Trusts do not have to dole out millions of dollars each year. Just because you set up a trust for a loved one, that person may not end up independently wealthy thanks to your hard work. It is a way, however, to share your wealth and provide, even if just a little, for the financial independence of others. It’s also a way to control how your money is used to benefit those loved ones while you are living and after you pass on.
If you would like to learn more about helping your loved ones build their wealth through establishing a trust in Denver, contact the Denver estate planning lawyers at The Brown Law Firm LLC: (303) 339-3750. We can help you determine the right amounts to include for your unique situation. You can also send us a message online to set up an appointment.