What are Trusts and Why to Use Them
Trusts are common estate planning tools to hold your assets for the benefit of some or all of your heirs instead of passing on the funds or property to them directly. They provide oversight and management of your assets, and ensure your heirs are properly supported for years to come.
If you are the one creating the trust, then you are the Grantor or Donor. You are granting control over your assets, estate, or property and defining the terms of the trust’s management and distribution.
You identify one or more Trustees, those who will be responsible for administering the trust. You can provide specific guidance to them about how you would like decisions to be made. In many cases you may serve as a Trustee during your lifetime.
You also name one or more Beneficiaries. These heirs receive the property or assets over time as you have defined. For example, you might create a trust with terms to take care of your surviving spouse while preserving the core assets for your children when that spouse dies.
Trusts are different from wills because they go into effect as soon as they are created. They can benefit those you care about during your lifetime, including yourself. However, both trusts and wills are key documents in a comprehensive estate plan.
Uses of a Trust
As the Grantor, you can manage your assets during your lifetime and define how your estate will be allocated upon your death. You may even benefit directly from the trust during your lifetime depending on the particular agreement. This can be important if you ultimately need long-term care.
Trusts do not go through probate court, which can be costly in terms of both money and time. Assets within a trust will be available to your heirs after your passing, instead of needing to wait to pass through the probate process.
Other valuable uses are to provide for children until they are ready to manage the assets themselves, to support dependents with special needs without disrupting government benefits, and to protect your financial legacy from creditors.
Trusts can also be used to avoid family conflicts because the terms within the trust remain private, unlike your Will.
Selecting the Right Trust
An experienced lawyer can help you identify the type of trust that matches your long-term wishes. Some common types are:
The Bottom Line
Trusts are an important estate planning tool to protect your wealth and financial legacy. They allow you to dictate both how your assets are managed during your lifetime and how they will be distributed upon your death.
When you are ready to manage and protect your estate by creating a trust, contact SLN Law. Our estate planning team will guide you through the process of designing the trust that achieves your goals.