Creating an estate plan is a way to provide instructions for your affairs after you pass away. This can include several components, one of which is a trust. A trust is a legal tool that makes it possible to pass assets to beneficiaries without going through the probate process. It can reduce the time that a beneficiary has to wait on their inheritance, which may help to alleviate some uncertainty.
A trust involves the creator, a trustee who manages it and the beneficiaries. If you create a revocable living trust, you would typically be the trustee while you’re alive. You would also name someone who would serve as trustee after you die or if you become incapacitated.
When are trusts useful?
Trusts can be particularly useful if you own real estate, have minor children, want privacy or need to make a specific plan for beneficiaries. You can set terms for trusts in a way that’s typically not possible with only a will.
Real life concerns are often the focus of a trust. Certain trusts have specific purposes, so it’s critical to evaluate that as you’re trying to decide what type of trust to set up. Some of the more common considerations involve providing support for minor children, individuals in a blended family or a family member who relies on needs-based services.
Once a trust is written, it must be funded, which means that assets are transferred into the trust or designated for transfer. Because a trust must be precise, it’s often best to work with someone who can ensure everything is set up properly. A trust is part of a comprehensive estate plan. Seeking legal guidance can help you to manage the remainder of your estate planning needs as well.