If you are creating an estate plan so that your loved ones will receive the support they need, you may feel overwhelmed by your options. It is extremely important to set up a plan that will work out best for those you love and be aware of the advantages of each option. If you decide to set up a trust, your loved ones may enjoy a number of benefits in the future. Not only can trusts be helpful when it comes to avoiding probate, but they may be a good option for beneficiaries who are struggling with debts.
Beneficiaries may have debt for many different reasons. For example, they may have struggled to move forward after a tough divorce, with their lives changing in many ways due to the financial consequences of divorce such as property division, alimony, child support or other hardships that were caused by divorce such as a gambling problem. Or, a loved one may have taken on a great deal of credit card debt after losing their job. Regardless, it is important to understand how different types of estate plans may affect those you love after you pass away.
Sometimes, trusts can be a great way to pass down assets to loved ones who are in debt because the assets are protected from creditors. Unfortunately, some beneficiaries have had assets from their loved one’s estate plan taken away due to their debt. Before moving forward with a trust, it is critical to determine which type will suit your needs best.