Trusts are a popular estate planning tool because they can help you accomplish numerous goals at once. At a very simple level, a trust is a legal entity that holds your assets that are intended to benefit others. They help you control how your assets are distributed after your death and help you plan for incapacity.
It usually falls to a knowledgeable estate planning attorney to create a trust document to achieve a specific purpose but the basic concept should be understood by anyone who is thinking about leveraging a trust. The three key groups involved in the implementation of a trust include the grantor, the beneficiary and the trustee. The grantor is the person who funds the trust with assets and creates it.
The beneficiary is the person or individuals who benefit from the trust. The trustee is the person who holds legal title to the trust’s assets and administers the provisions of the trust as outlined in the document. The trustee must meet a fiduciary responsibility to act in the best interests of the beneficiary. When used properly, trusts can be used to avoid the expense and delay of probate court, shield assets from potential creditors, minimize estate taxes, assist with issues of incapacity and move income tax burdens to beneficiaries in lower tax brackets.
To discover how a trust can be used to help you accomplish your goals, schedule a consultation with an experienced estate planning lawyer.