The Benefits of Creating a Trust


A trust allows a person to transfer property to another party (or multiple parties). The trustee can manage the assets until a specified time, or upon the death of the trustor. This allows for a delay in the distribution of assets, as well as the ability to restrict access to certain assets if there are concerns about beneficiary spending habits. A trustee can also help a beneficiary manage money or protect assets from creditors. Trusts are an important tool for reducing estate taxes, as they allow the trustee to separate the beneficiaries’ interests from the grantor’s.

When deciding whether to create a trust, you should speak with a lawyer who has experience in this area. An attorney can help you decide whether a trust is necessary, what type of trust would be most beneficial and how it should be drafted to achieve your goals.

There are many benefits of a trust, including avoidance of probate, tax savings and the control it gives you. However, the creation of a trust can be complicated and expensive. You may be tempted to use prepared forms or kits, but these are often too general and fail to address your individual circumstances. You should also beware of workshops conducted by individuals who have an incentive to sell you a trust.

You can create a trust yourself, but you will need to carefully consider who should serve as trustee and who you want to be your beneficiaries. A good trustee must be responsible and reliable, have the necessary knowledge and expertise, and be able to communicate with beneficiaries. In some cases, a corporate trustee is the best choice because it provides professional management and can offer objectivity to decisions regarding the distribution of assets in accordance with your wishes.

A major benefit of a trust is that it can avoid probate, which can be costly and public. The trust document is a private record between the parties involved and does not become part of the public records, unlike a will. This can be especially helpful if you wish to disinherit someone or make distributions that you do not want made public.

The trust can also be structured to provide a level of privacy for the beneficiaries. In addition, the trust can be used to split income with family members in a way that is not available with a will. However, there are a number of tax laws that limit income splitting, so it is important to speak with a specialist before making this decision.

In the end, a trust can be helpful in protecting your legacy and avoiding family disputes. While conflicts are inevitable, you can reduce their impact by putting your affairs in order and being clear about what you want to happen. You should also consult with a knowledgeable estate planner to discuss how a trust fits into your overall plan. The more detailed and comprehensive the trust, the more likely it is to be successful.