A Trust is another type of estate plan, but may not always be necessary. There are many different types of trusts to fit many different types of situations and property. You should consult a qualified estate planning attorney to determine if a trust is necessary for your situation and which type of trust would be most beneficial to achieve your goals and objectives.
A Trust is nothing more than an agreement that one person makes to hold property, real or personal, for the benefit of another. Interestingly enough, people create trusts all the time without realizing it.
There are four components to every trust, regardless of the name given to it.
- Someone (known as the trustor or settlor) must create the trust.
- A person or entity (known as the trustee) must agree to hold money and/or property for the benefit of someone else.
- Money, property, and/or assets must be held by the trustee.
- Someone must benefit from the trust. (This would be the beneficiary of the trust)
Trusts are not just for the wealthy. A Trust will allow you to put conditions on how and when your assets will be distributed upon your death. It allows you to reduce your estate and gift taxes and distribute assets to your heirs without the delay, cost and publicity of these documents becoming public knowledge for anyone to access. It also can protect your assets from creditors and lawsuits.
When you have a Trust, one caveat would be the assets you want protected must be retitled in the name of the Trust. Anything that is not titled in the name of your Trust when you die will have to be probated.