Trust is a core concept in many important areas of life, from romantic relationships to business operations to political decisions. But in estate planning, trust can be an even more important tool in the arsenal of the knowledgeable attorney. A well-designed trust can help you avoid probate, manage taxes and preserve your legacy for the people and causes you care about.
Essentially, a trust is a legal document that specifies how property should be managed and distributed after your death or incapacity. Your attorney will work with you to identify your goals and then create a customized trust agreement to meet those needs. The process of drafting a trust can take some time, especially when the attorney must carefully review your assets and family situation. Depending on the complexity of your asset allocation and distribution strategy, it may also be necessary to hire specialists in taxation and finance.
One of the benefits of a trust is that it can be amended during your lifetime, so you can adapt it to changing circumstances. For example, if you become involved in a charitable cause that is near and dear to your heart or have a new grandchild, you can add them as a beneficiary to the trust at any time. This flexibility makes the trust an incredibly useful tool for anyone who wants to ensure their affairs are managed properly during incapacity or after their death.
Another benefit is that you can transfer your assets into a trust without incurring any gift taxes. This can be a significant advantage for those who want to avoid paying taxes on their wealth or pass on more of their estate to beneficiaries.
However, there are some disadvantages to a trust. One is that it can be costly to establish a trust and maintain it. The attorney’s fees for preparing and maintaining the trust agreement can be substantial, particularly when there is a high-value asset in the trust. It is also a good idea to consult with your attorney regularly to review the terms of the trust.
Finally, a trust can be susceptible to claims from creditors of the Grantor and can lose some of its protections once it becomes Irrevocable upon the Grantor’s death. To avoid this, it is important to put assets into the trust as soon as you can and retitle them accordingly.
Although a trust can be a useful tool for anyone, it is essential that you work with an experienced lawyer who understands your goals and the intricacies of creating and managing a trust. The process can be lengthy and expensive, but the peace of mind in knowing that your wishes will be carried out after your death or incapacity is well worth it. So start the conversation with your attorney today to learn more about how a trust can work for you.