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Who might want to consider setting up a trust?

Trusts are one type of estate document that can protect your assets both during and after your lifetime. While you don't have to be wealthy to set up and benefit from a trust, the National Association of Financial and Estate Planning executive director points out that trusts are especially beneficial to families with $100,000 in net worth or more.

The director also highlights some situations that might make a trust beneficial. If a lot of your assets are located in something like an art collection or real estate investments or you want to reduce taxes associated with your estate, he says trusts are a good idea. Trusts can also help you set up an estate so that assets are provided to heirs in a non-immediate manner. For example, a trust can dole out assets to minor heirs over time to help ensure responsible financial management.

Trusts may also be a good estate vehicle if you are part of a complex family structure. You may want to leave enough to a second or third spouse to support his or her quality of life while also ensuring that children from a previous marriage receive much of your assets. In even more complex situations, trusts can dictate how assets are delivered to a variety of heirs, including non-family members such as business partners or charities.

In many cases, trusts also help your heirs avoid tedious and costly probate situations. If you anticipate that probate litigation may occur or want to avoid disputes among heirs, it might be a good idea to couple trusts with other estate vehicles, such as wills and life insurance.

Source: CNN Money, "Estate planning: Is a trust beneficial?," accessed April. 09, 2015

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