Trusts are versatile estate planning tools that offer many benefits, including protection of family assets, streamlined distribution, tax efficiency and flexibility. They are not magic bullets, however, and require careful drafting and implementation, as well as the guidance of an experienced team to manage them effectively.

The trust process begins when the grantor works with an attorney to create a trust document, which details the grantor’s wishes regarding specific assets. The grantor then transfers those assets to the trust, and names a responsible individual or firm to serve as trustee, managing the trust assets in accordance with its terms. The trustee is responsible for communicating the trust’s terms to beneficiaries, and ensuring that all distributions are in compliance with state law and the trust document.

A well-drafted trust can also provide a measure of protection for trust assets, shielding them from creditors and preserving the generation-skipping transfer tax exemption. They can also offer other tax advantages, depending on the specific trust terms and underlying assets.

As with any financial strategy, trusts have both good points and bad points. Some people worry that trusts remove personal control over assets. Others fear that trusts can be subject to legal and tax ramifications that may not always be advantageous. While these concerns are legitimate, they can be mitigated with careful drafting and clear expectations.

In addition to providing asset protection and other financial benefits, a trust can also be an important tool for privacy and peace of mind. In most cases, trusts can bypass probate, allowing family members to avoid the public record of estate assets and reducing estate and other fees. This is particularly true for trusts that are designed to hold real estate or other assets that would otherwise be subject to probate.

There are also certain types of trusts that can be a valuable tool for families with unique circumstances. For example, a special needs trust can be used to pass funds on to a disabled family member without jeopardizing their government benefits. The trust terms can be set up so that the beneficiary receives annual income distributions, while still maintaining eligibility for essential programs and services.

If you have questions about trusts or want to discuss how they can be part of your overall financial plan, we encourage you to contact Blake Harris Law for a consultation. We can help you identify and gather all the relevant assets, understand the role of a trustee, and determine whether or not a trust is right for your situation. To get started, call us today at 630-443-1000. We look forward to hearing from you!