Trust-or the belief that someone or something can be relied upon to do what they say they will-is a central element of social functioning. It’s critical for romantic relationships, friendships and interactions between strangers on a large scale. Society as a whole would likely cease to function without it.

A trust is a legal entity created by a person, called a “grantor” in the case of revocable and irrevocable trusts respectively, who transfers ownership of assets to the trust. Once the grantor has completed this step, which can take place in a variety of ways, the trustee takes on the responsibility for managing and distributing the trust’s assets according to the grantor’s wishes.

There are many benefits to establishing a trust, including minimizing taxes, protecting assets and keeping family matters private. In addition, trusts can also help to avoid the often-lengthy probate process.

The most important part of a trust is selecting the right trustee. It is essential that the trustee be responsible and trustworthy, with the required experience and expertise to manage the assets of the trust. A trustee should also be able to communicate effectively with beneficiaries. A trusted friend or family member may feel like the most appropriate choice, but professional corporate trustees and trust companies may provide better management of complex assets while avoiding potential conflicts of interest. However, they will come with a cost.

When determining who will benefit from a trust, it is important to consider incapacity. Anyone who is concerned about incapacity, such as a stroke or dementia, should consider using a trust to ensure that their resources are managed and distributed appropriately in the event of incapacity, avoiding potentially costly and lengthy conservatorship proceedings.

Lastly, trusts can be used to protect against predatory creditors or state income taxation, which can be an issue for some beneficiaries. A properly structured trust can preserve a beneficiary’s federal estate tax exemption and may help them avoid state estate taxes altogether.

It is important to consult with an attorney or financial planner before making a decision regarding trusts. A lawyer who specializes in this area will be able to explain the different options available and provide specific advice on which trust would be most suitable for you and your family.

George: As people’s wealth increases, it becomes more common to use a trust as an important component of a comprehensive estate plan. This is especially true for those who want to minimize taxes and protect their family’s privacy.

Regardless of how much you have, it is always a good idea to review your beneficiary designations for other assets, such as retirement plans, so that they reflect your current intentions. And don’t forget to update your beneficiaries after marriage, divorce or the birth of a child. Taking the time to do these things now can avoid confusion and conflict among your loved ones later on. Considering the many advantages, it’s no wonder that trust is an important tool in the estate planner’s toolbox.