The main reasons that people use trusts are often to leave money to their heirs while still maintaining some control over it. For instance, if you are worried that your heir will waste all of the money quickly, you can put it into a spendthrift trust. If you want them to use the money to pay for their college tuition, you can use an educational trust.
However, did you know that you can also set up a trust for yourself?
People often do this in case they become incapacitated. Say you have a stroke. While you are recovering in the hospital, the doctors keep you in a medically-induced coma. Who can pay your taxes and your mortgage and handle other financial affairs? If you put money into a trust for this purpose, the trustee can then use that money on your behalf.
You can have the trust set up so that, when you recover, the control shifts back to you. You don’t give up the assets permanently, but you ensure that someone else can access them when needed.
There are other tactics to do essentially the same thing. For example, you can use a legal power of attorney to give someone else control of your estate and make legal decisions while you’re incapacitated. Using the trust may limit the scope to purely financial reasons, though, which some people find helpful.
As you can see, you have a lot of options with trusts and it’s important to consider them all carefully when doing your estate planning. Then you can look into the steps you need to take to set one up.
