How can a trust help your estate plan?

On Behalf of | Aug 12, 2021 | Estate Planning, Wills and Trusts

You may have heard of the term “trusts” when contemplating your estate plan. The concept of executing a trust may seem confusing to some. However, the reality is that most people who establish an estate plan can benefit greatly from creating a trust that is not overly complicated. A trust is simply a legal tool that is designed to hold title to your assets.

A basic trust has three primary parties involved. The creator of the trust is the grantor, settlor, or trustor. The manager of the trust is the trustee. Those who are entitled to receive distributions from the trust are the beneficiaries. Typically, those creating a standard trust will serve in all three capacities until incapacity or death.

A properly drafted trust can help you in the event of your incapacity and death. Upon the grantor’s incapacity, the trust allows for a successor trustee to manage the trust on behalf of the grantor. Upon the grantor’s death, the trust assets avoid probate court proceedings and can be distributed to the beneficiaries efficiently and in accordance with the grantor’s desires.

There are various types of trusts that accomplish different objectives. Everyone can benefit from a revocable trust that addresses what happens upon their incapacity and death. These are trusts that you can amend and revise as you wish. Sometimes it makes sense to establish an irrevocable trust. An irrevocable trust is a trust that cannot be amended or changed as easily. Sometimes irrevocable trusts are used to protect the grantor’s assets. Sometimes irrevocable trusts are used to minimize estate taxes when the grantor dies. Irrevocable trusts may not be for everyone, but they can be effective tools to achieve certain objectives.

Everyone who is contemplating getting their estate plan created for the first time or revised after the initial plan, should consider the benefits of having a trust.