Trusts are an important estate planning tool that can be used in conjunction with a will or, in some circumstances, in place of a will. As a result, it is helpful for estate planners to be familiar with what trusts do and can offer when developing an overall estate plan that estate planners can rely on for peace of mind.
A trust is a legal estate planning tool that is used to manage the distribution of property to the beneficiaries of the trust. There are certain important requirements for the formation of a trust for estate planners to be familiar with. To create a trust, property is transferred to a person or institution that acts as the trustee. The trustee has legal ownership of the property and, with that, certain fiduciary duties. The trustee manages the transferred property for the benefit of another party who is referred to as the beneficiary.
It is important that property is actually transferred for the trust to be properly and validly formed. There are two broad categories of trusts, including testamentary trusts and living trusts, with different purposes and rules that go along with each of them. Under the two umbrellas of the different categories of trusts, there are several different types of trusts that estate planners should be familiar with. There may also be probate implications and advantages of a trust that estate planners should also be familiar with.
Trusts can serve a variety of different, useful, purposes as part of an overall estate plan.
Estate planning does not have to be daunting and with a little help, estate planners can better understand all of the estate planning tools, including trusts, available to help them develop an estate plan that works for them and their family.