Estate Planning | The Basics of Trusts
Estate Planning | One of the most often-used tools in estate planning is a trust. A trust is a legal entity created in order to manage your assets, control how your assets are distributed after your death, or to set a plan in case you become incapacitated. Think of a trust as a bucket. You can put virtually anything in this bucket: cash, a house, stocks, savings bonds, real estate, jewelry or heirlooms. This bucket holds all these items for someone else. And you get to determine when, and how, those items are distributed to these other people. There are many kinds of trusts. Some are designed to do very specific things. But let’s look at some basic concepts:
You want to leave money and a house to certain members of your family. You would like to avoid probate. Probate is the long (think months to years) and costly (court filing fees, attorney’s fees) process of settling a deceased person’s estate through the court system. You don’t want to leave your family to deal with all that. You want quick and easy. So you create and fund a trust.
You, the one filling the bucket in this case, are the grantor. The people who will receive the contents of this bucket are called beneficiaries. Though beneficiaries are most often spouses, children or other family members, a charity or organization can also be named as a beneficiary. You can have as many beneficiaries as you want.
You now entrust someone to watch over and manage the contents of this bucket. This person is the trustee. You can name yourself as trustee, or you could name another family member, a trusted friend, your attorney or even an institution, such as a bank. You can choose multiple trustees if you like.
As stated before, you may want a trust to do a specific thing. You may require more than one trust to do all the things you want to accomplish. Here a few reasons why you might want a trust:
- To avoid probate;
- To reduce or eliminate inheritance taxes;
- To prevent creditors from accessing your assets;
- To support a charity after you’re gone;
- To grow assets through financial managers;
- To hold your assets until your minor children are mature enough to handle this influx of money;
Estate planning with a professional
Every person’s estate and desires are unique to themselves. To get all the questions that are important to you answered so you can proceed with confidence, contact an estate planning attorney. Go over your situation and the options with someone who understands the laws of your state. At Mortellaro Law, our initial consultations are always free. Contact us TODAY!