Trusts serve many purposes but require competent management
Current federal tax laws have eliminated most of the need to use trusts to transfer assets because inheritance tax exemptions currently stand at $11,180,000. Although wealthy families in South Carolina might have few concerns about federal taxes at this point, trusts still offer significant benefits to people who want to exert control over the distribution of funds and keep wealth within a family.
By placing assets within in a trust instead of directly distributing inheritance to heirs, people could protect beneficiaries from outside claims on the money. A trust might prevent creditors from seizing funds or shield the money from a divorcing spouse. The terms of a trust could also impose rules that limit an heir’s vulnerability to financial exploitation or poor personal decisions. A beneficiary with special needs might still qualify for government benefits while still accessing an inheritance held in trust.
Trusts require a trustee to manage its affairs. The role could expose someone to legal challenges and always comes with responsibilities. People can select any trusted individuals who they want to serve as trustees, but professional trustees, like a bank trust company, could present the best choice. An independent party outside of a family could maintain objectivity when interpreting the rules of the trust. A third-party trustee also reduces the potential for family conflicts that arise when a family trustee disagrees with the requests of a beneficiary.
Every person who wants to build an estate plan will need to navigate important financial and legal decisions. The advice of an attorney might inform the person about available options for protecting assets and managing a legacy. An attorney may research how to design a trust that promotes the person’s final wishes. To formally establish the trust, an attorney might write the necessary documents.