People create trusts as part of their estate plans for many reasons. Perhaps they have a family member with special needs or a history of substance abuse that they want to protect from the risks of a lump-sum inheritance. Maybe they have a blended family and want to provide support for a spouse without eliminating the inheritance rights of their children.
There are countless family circumstances that lead to the creation of trusts and many different ways in which individuals can fund a trust. Ideally, a trust has adequate resources to provide for its beneficiaries for the rest of their lives. In some cases, there could potentially still be valuable property in the trust when the beneficiaries of a trust die. What happens to those resources at that point?
The trust should discuss the final distribution of assets
The person who creates a trust technically has control over what happens to the property in the trust even many years after they die. In many cases, the creator of the trust will name a specific individual to serve as the remainderman for the trust. They could also choose multiple people to share this role.
A remainderman receives whatever is left of the assets after the trust has otherwise fulfilled its purpose. An example of this would be a scenario in which someone remarries and creates a trust so that their spouse has use of their vehicles and the right to live in their marital home until they die. Then, their children inherit the actual property and the vehicles.
Another example might involve a special needs trust where the beneficiary receives supplemental support for the rest of their life, with the balance going to surviving family members or to a specific charity after they die.
Those with long-term legacy plans often turn to trusts
One of the reasons that trusts are such useful testamentary instruments is that they give someone the ability to plan not only for the distribution of resources after they die but also for what happens after the death or incapacitation of the beneficiaries they select.
The more resources that someone has and the more specific their intentions for their legacy, the more valuable a trust may be for that individual’s estate planning needs. Adding a trust to an estate plan and clarifying it as fully as possible often benefits those who want to leave behind meaningful support for people and causes that matter to them.