A trust can be an effective tool for estate planning purposes. A revocable living trust is one of the most popular types of trusts as it gives the trust’s creator flexibility to make changes if needed. Although they cannot be changed, an irrevocable trust may provide for asset protection from creditors. When creating a trust, an individual selects a trustee to oversee the trust. The trustee may be an individual or an entity, such as a bank.
It is a good idea to select a successor trustee in case the original trustee passes away or is otherwise unable to carry out the terms of the trust. Likewise, multiple beneficiaries may need to be designated in case the original beneficiary passes away or is unable to receive assets from the trust. Regardless of whom the trustee is or who the beneficiary or beneficiaries are, the one of the biggest advantages to a trust is that they do not need to go through probate.
Other reasons to create a trust include the ability to manage how and when minor children get assets from the trust. It can provide for greater financial management for beneficiaries who may not be able to manage money on their own. In the event that a third party is managing funds for a disabled family member, the trust can provide detailed instructions as to how the money or other assets in the trust are used.
Those who wish to create a trust may wish to talk to an attorney who is familiar with estate planning and administration. An attorney may be able to create trust documents that protect a grantor’s assets while also adhering to state and federal laws. This makes it more likely that the trust may withstand any legal challenges that may arise either before or after the grantor passes on.
Source: USA.gov, “Trusts”, November 18, 2014