Reasons for a Living Trust
Reduction of Assets
- Frequently, the person setting up a trust seeks to dispose of assets by placing assets in a trust. This is usually done in order to achieve estate planning goals, which vary per individual.
- The property placed into a trust may generate interest. This interest can then be distributed to the person who set up the trust or to beneficiaries as income.
- When property is placed in the trust and interest income is distributed, the trust is not taxed.
Managing Family Businesses
- Some trusts are set up to benefit a family business by reducing taxation and/or to specify which family members are benefited by the trust property.
- Frequently, trusts are set up as a way to avoid probate (which is the process by which a last will and testament is administered with court oversight). Upon the death of the person who set up the trust, the trust property will be distributed in accordance with the trust and as a result, the court is not involved.