Advantages of Using a Trust
Many trusts are designed to produce significant tax advantages for either an individual, their estate or the beneficiaries. However, even where a trust is not intended to produce a tax benefit, it may help a person save (or defer) the high cost of income, estate or gift taxes.
Control and flexibility
Under some circumstances, a person may feel that the beneficiary does not possess sufficient financial knowledge or feels that the beneficiary may spend the property unwisely if they received it outright. They may also wish to financially support one person but ensure that the bulk of the property ultimately passes to others.
In many of these cases, the solution can be found by establishing a trust. Because there are virtually unlimited possible variations and forms of trusts available, it is possible to develop a trust to meet whatever circumstances may be presented.
Disadvantages of using a trust
Many times, trusts are established to hold real property. While this may or may not be advisable, a person should understand that the transfer can lead to the loss of property tax exemptions. Additionally, owner occupancy is sometimes necessary to obtain a mortgage or insurance.
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