I wish that financial education was taught in public schools. What is a trust, what are some benefits, and who is it a good option for?
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A trust is simply a legal entity – like a corporation almost. The difference is that the trust document spells out exactly what the money is to be used for. The benefits all have to do with estate planning – you get to decide what happens to your money when you die (actually when alive too for some types of trusts). The option is good for estate planning and potentially some tax planning. The cons are the expense and hassle – legal fees, accounting fees, and the hassle of maybe wanting to do something different with the money after you set it up.
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