Is It Better To Have Multiple Trusts Instead Of A Single Trust To Keep Assets?
Different people have different reasons for using multiple trusts. However, it is fair to point out that the vast majority of my clients only use one or two trusts. Let’s discuss the options. A single trust is quite sufficient for a family that has no desire to achieve asset protection, and no need to protect the beneficiaries from one another. For instance, if your estate is simple and your family is small, a simple revocable living trust will likely be your first choice.
Multiple irrevocable trusts are often terrific for people who are seeking to achieve some financial security by separating certain assets. For example, if you have a rental house that causes some concern about a possible future lawsuit, that property might be an excellent asset to put into a freestanding irrevocable grantor trust. The trust will segregate the liability, as well as protect it from your personal liability, thereby maintaining an inheritance for your loved ones.
There are even more reasons for the use of multiple trusts. Some of my clients do not want the children from the first spouse to have knowledge about what the new spouse will be inheriting. Therefore, they set up two separate revocable trusts. By doing so, they do not allow the children, who may be angry, to have access to the trust that is designated for their current spouse. This allows the current spouse to have an opportunity to live in peace, and free from the prying eyes of a child who may be disgruntled. Likewise, some families set up separate trusts for their children. They do not intermingle the assets from the children’s trust with the grandchildren’s trust. This works well for certain families who have an income situation that makes taxation an important consideration. However, you still need to be very careful about the kinds of assets that go into certain trusts.
Lastly, let’s go over asset protection trusts for the basic middle-income family. Many people who are not wealthy still understand that it is important to have some asset protection. Asset protection can ensure that they will never be dead broke in a nursing home. It also gives them the best opportunity to leave assets for the benefit of their children. These families will often set up two trusts. First, they will set up a revocable living trust to hold their day-to-day bank accounts, the vehicles that they drive daily to work, and so forth. Second, they will also set up an asset protection trust to hold particular investment accounts or retirement accounts. Irrevocable trusts are greatly beneficial to families who want to segregate some money that is not necessary for their daily living needs with the hope of leaving it for those they love.
I have one client who has put his mineral rights into an irrevocable trust because it is important for him to leave it to his daughter. I have another client who has put her Raymond James investment account into her irrevocable trust because she has enough income and health insurance to meet her daily needs. It is important to her that she leave a legacy for her children and grandchildren. The combination of an irrevocable trust and a revocable living trust has become the top seller in our estate planning practice. You may find it useful in your situation as well.
For more information on Having Multiple Trusts In Oklahoma, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (405) 754-4166 today.
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