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Why It’s Important to Establish a Trust


Estate Planning Is for Everyone

Although estate planning is a critical aspect of financial management, people often overlook it or put it off. Many believe that estate planning is only necessary for the wealthy or elderly, but this couldn't be further from the truth. Regardless of your age or financial status, it’s essential to have a well-thought-out estate plan.

One of the primary reasons estate planning is important is to ensure that your assets are distributed according to your wishes after your passing. Without a proper plan in place, your loved ones may be left to navigate complex legal processes and disputes over your estate. By clearly outlining your intentions in a legally binding document, you can provide peace of mind and avoid unnecessary stress for your family during a difficult time.

Considerations in Estate Planning

To establish an estate plan, you must carefully consider your assets and your desires for the way they will be distributed after death. Families with special circumstances — children with special needs, blended families, survivors with mental health or substance abuse concerns — need to create plans that address those situations. For many families, special circumstances lead them to consider establishing a trust.

What Is a Trust?

A trust is a legal arrangement, set up by an attorney, where a trustee holds and manages assets for the benefit of the trust's beneficiaries. A trust can be created for various reasons, such as avoiding probate, planning for a special needs family member, asset protection, minimizing tax liability, incapacity, planning for minor children, and more.

A trustee can be an individual or a trust company. It is important to consider naming a successor trustee in case your initial choice is unable to fulfill their duties. In many cases, both individual trustees and corporate trustees work together to ensure the smooth management of the trust.

Trusts can be funded and operated while you're alive or after your death. Trust provisions can ensure that the assets you leave behind are handled exactly as you intend. A trust is versatile and can solve the issues and questions you and your family might struggle with in the future.

How to Establish a Trust

Establishing a trust can seem overwhelming, but it doesn't have to be. Here's an approach to make it easier:

  • The first step is to determine your goals. Nothing is off limits. Your vision of your legacy is entirely up to you.
  • Once you have clarified your vision, you should meet with an estate lawyer to create a legal document that will reflect your goals.
  • Once you have established a trust, you will name a trustee, whether it’s a trusted person or an organization.

An Essential Part of Your Estate Plan

Setting up a trust allows you to better protect the assets you've worked hard to accumulate while ensuring that, when the time comes, your family can avoid conflict regarding your remaining assets.

Establishing a trust is an essential step in securing your family's financial future. By taking the time to plan and work with a licensed attorney and trustee, you can rest assured that your legacy will be handled exactly as you intend.

Finally, be sure to advise your family and trusted loved ones where they can find your essential legal documents when they are needed. All AAFMAA Members can safely and securely store documents in their Digital Vault in the Member Center and provide access to those who will need it.

If you have questions, please contact AAFMAA Member Benefits by calling 888-976-3712, option 2, then option 2 again, or email [email protected].

This article was originally published August 20, 2015.