A trust is a special fiduciary arrangement that allows a third party, known as a “trustee,” to hold assets on behalf of a beneficiary. Trusts are flexible and can be arranged in a variety of ways to specify exactly how and when the assets will pass to the beneficiary. Traditionally, a trust is used for minimizing estate taxes. However, it can offer other benefits and serve as part of a well-crafted estate plan. Trusts typically avoid probate, so the beneficiary can gain access to these assets more quickly than if they are transferred using a will. Assets in a trust that pass outside of probate will also save time, court fees, and potentially reduce estate taxes. Trusts also offer other benefits including:
Giving You Control of Your Wealth – With a trust you can specify the terms precisely, giving you control of when and to whom any distributions will be made. You also have the option of setting up a revocable trust so that the assets remain accessible to you while you are alive, but designate to whom the remaining assets will pass to after your death.
Protection of Your Legacy – A trust can also help protect your estate from your heirs’ creditors or from those who are not good at money management. For example, if you have children you can state that assets in the trust are not accessible until they turn 30 years old
Privacy and Probate Savings – Because probate is a matter of public record, you may be able to protect your privacy with a trust. A trust could allow your assets to pass outside of probate and remain private. This may also reduce the amount of court fees and taxes.