What is a Trust?

A Trust is a planning tool that helps avoid probate and distribute your assets. Establishing a trust helps your family avoid thousands of dollars in probate costs, taxes, and time – a minimum of six months dealing with probate courts. It is a legal arrangement that allows one person (the trustee) to hold and manage assets for the benefit of another person (the beneficiary). The trust is created through a legal document called a trust agreement or trust deed. The trustee has a fiduciary duty to manage the assets in the trust for the benefit of the beneficiary, and follow the instructions in the trust agreement.

One common reason to create a trust is to provide for the care and support of a minor child or an adult with special needs. By creating a trust, you can set aside assets for the beneficiary's benefit, without the risk of the assets being misused or wasted. You can also provide for the ongoing management of the assets after your death, by naming a successor trustee to take over when you pass away.

Another reason to create a trust is to minimize estate taxes. By transferring assets to a trust, you can remove them from your taxable estate, reducing the amount of estate tax that your heirs will have to pay. Trusts can also provide for the distribution of assets to heirs in a more flexible and efficient way that avoids probate.

In addition to these reasons, trusts can also be used for charitable giving, asset protection, and business succession planning. Whether you need a trust depends on your individual circumstances and goals. So, you should consult with an experienced estate planning attorney to determine what type of trust is right for you.