What is the Main Purpose of a Trust?
The main purpose of a trust is to hold and manage money or property for the benefit of someone else. Typically, it is done by a written document called a trust agreement, which allows you to control how your assets will be used and who receives them in the future. The grantor, or person who creates the trust, can be you or a third party. The trustee is the person or organization responsible for managing the assets of the trust until they are distributed to beneficiaries.
1. The Advantages of a Trust:
A trust is generally used for minimizing estate taxes, protecting assets from creditors and providing liquidity to your heirs during probate, among other reasons. Because they can be customized, they may also offer additional benefits, such as helping to preserve family wealth or passing down a particular set of values.
2. The Disadvantages of a Trust:
A major disadvantage of a trust is that it requires attention to detail and can be complex and expensive. This is especially true if you have more than one type of asset in your trust or want to shelter more than just your home.
3. The Types of Trust:
There are a variety of types of trusts, so it’s important to find the right one for your needs. Some are designed for specific purposes, such as a “purpose trust” or a “living trust.” These types of trusts have their own complexities, so it’s essential to work with a lawyer who understands the law and your needs when creating them.
4. The Trustees:
There must be a qualified and reliable trustee who has the legal authority to manage your trust. Choosing the right people to be your trustees can make all the difference in the world.
5. The Assets in the Trust:
If you have a variety of assets in your trust, it can be difficult to track them all. This can lead to a lot of time and confusion during the process of distributing your estate. A professional estate planning attorney can help you keep track of the trust assets and ensure that they are being distributed in a timely manner.
6. The Beneficiaries:
A trust can be useful in ensuring that certain people have access to your money after you die, such as an underage child or someone with a physical disability. A revocable trust can be used to give a beneficiary the rights to manage the funds in the trust once they reach age 18.
7. The Beneficiaries:
You will need to name your trust beneficiaries. These can be your children, spouse, a parent, another relative or anyone else you want to have access to the trust funds. If you are setting up a trust for the first time, be sure to get professional guidance from a lawyer who can help you create a trustworthy and effective trust fund.
