A Trust is oftentimes associated with wealth. The reason for this is that selecting the appropriate Trust based estate plan could save one’s estate from excessive death taxes. However, there are many more benefits to having a Trust. Before identifying some of those benefits, it is helpful to know what a trust is and whether it is the same thing as a Will.
In simple terms, a Trust is an agreement as to how your assets should be handled and eventually distributed. A Trust is a powerful tool that gives the person creating the Trust complete control over his or her assets. The most fundamental difference between a Will and a Trust is the potential avoidance of Probate Court. While a Will is necessary and provides a clear set of instructions as to what to do with the estate, it still must pass through Probate Court. A properly drafted and funded Trust avoids Probate Court.
So what are some of the benefits of having a Trust that may apply to everyone? As mentioned, a trust avoids probate and potential public scrutiny. If privacy is a concern of yours then you would want a trust based plan as opposed to a will based plan. A trust is completely private and, unlike a probated will, a copy cannot be obtained at the Courthouse. There are typically no Court filings with a Trust plan. A trust can also plan for disability. In the event that you become disabled, the person you appoint as Trustee (the one taking care of your property) may exercise the powers given by you to take care of property owned by the trust. In other words, a Trust can also avoid guardianship or conservatorship legal proceedings. A trust makes it easy to place conditions on the distribution of any inheritance. For example, rather than an heir receiving one lump sum of money, a trust could direct that your grandchildren receive a certain amount of money for educational purposes. Finally, if you are a small business owner, a trust may make it easier to distribute ownership interests in that business.
A trust can be a powerful document that offers enough flexibility to control and ultimately distribute your assets. However, a trust is not by any means a cookie cutter form and can become very complex. There are myriad types of trusts to meet your specific needs. If you think a trust may be the right estate planning tool for you, you should discuss the option with your estate-planning attorney before setting one up.