trusts estate planning

Your Guide to Trusts

Listen to people talk about estate planning for long enough and you’re bound to hear them mention trusts. Trusts are extremely popular and, thanks to their incredible versatility, almost anyone can benefit from incorporating one into their estate planning. However, that versatility means that the structure of trusts varies widely and they can be used for many different purposes. As a result, it can be difficult for many to pin down what a trust actually is. If you aren’t quite sure what a trust is, then it’s important to learn since knowing how trusts work can help you decide whether or not a trust is right for you.

  • What is a Trust?

    Simply put, a trust is a document that outlines rules for the transfer of assets. The assets are taken from the person who sets up the trust, known as the trustor. They are then managed by the trustee, a designated third-party. Finally, upon some condition being met, the funds are distributed to the trust’s beneficiary. When described this way, trusts may not sound special. However, trusts have earned their popularity. There are many specialized trusts that can perfectly fit specific estate planning needs. Trusts also come with an array of powerful incentives that you can benefit from taking advantage of.

  • Why Are Trusts Powerful?

    There is a trust for almost any situation. If you have a child with a disability, a special needs trust may be just what they need. If you want to lower your estate taxes through donating, you may want to start a charitable trust. If you’re planning to give money to someone but don’t want them to misuse it, consider a spendthrift trust. These are just three of the many different types of trusts. Each one can enable you to implement a layer of thoughtful personalization in your estate plan.

    Trusts have some shared characteristics that make them a powerful complement, or even replacement, for a will. When your assets are disbursed through a will, they have to go through probate. That means it can take months, or even years, before your heirs get their inheritance. Trusts help you bypass probate so that your loved ones don’t have to wait. Trusts are also excellent asset protection tools. Utilizing trusts makes your estate resistant to both taxes and creditors. In short, when you use trusts, the people that you care about can get more money faster than if you only rely on a will.

Deciding which trust is right for you is no small feat. Determining which trust suits you best requires taking many different factors from all aspects of your life into account. That’s why it’s important to consult with an estate-planning attorney and figure out how you can get the most out of trusts. Trusts may be popular, but they are certainly not overrated. When you get in touch with an estate-planning lawyer and create a trust, you can relax knowing that your loved ones will benefit from the best possible estate plan.

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