Trusts are an important part of many people’s estate plans. While they can seem geared toward high-net-worth individuals and families, even people of more modest means can benefit from using them. The primary purpose of a trust is to protect assets from legal and tax problems that can arise after death, as well as to ensure that the assets are distributed to family members in an efficient manner.

One of the most important aspects of trust is choosing a trustee or trustees to manage your trust. Choosing an unbiased third-party is usually best. It also reduces the likelihood that a trustee will be influenced by family relationships, which can cause conflicts of interest. In addition to choosing a trustee, it is important to review the legal documents that will govern your trust, and discuss them with an attorney.

The concept of trust has been studied by researchers in several disciplines. Psychologist George Loewenstein defines trust as “the degree to which an individual opens himself to the possibility of being hurt by another person.” According to social scientist Richard Grunig, this openness to risk is determined by three determinants: integrity, the belief that a person will do what is right; dependability, or the belief that someone will keep their promises; and confidence, or the belief that a person will do what they say they will do.

Those with higher levels of agreeableness, which is a personality trait, are more likely to be trustworthy, but it isn’t necessarily easy to build trust in all situations. Moreover, those who have been victimized or betrayed in the past are often more cautious and less willing to express their trust in others.

Brown University professor Rose McDermott, who studies behavioral economics, explains that there is also a biological component to trust. Her research shows that oxytocin, a hormone released during social bonding, can increase a person’s willingness to take risks in their interactions with other people.

While these concepts are helpful for understanding trust, it’s important to consult with an estate planning professional when deciding whether and which type of trust is appropriate for you. Trusts are highly versatile and can be used in a number of different ways to achieve specific goals. In addition, there are a wide variety of assets that can be transferred into a trust, including cars, stocks and bonds, savings/checking accounts, certificates of deposit, insurance policies and retirement accounts. Many of these illiquid assets can be more efficiently sold or liquidated through a trust than they are when sold individually. This can save a lot of time and money. Also, transferring an illiquid asset into a trust can require special care in order to avoid early withdrawal penalties and other charges. In some cases, it may be necessary to retain a portion of an illiquid asset for the purpose of continuing to maintain the value of the property until it can be sold. This can be done by creating a “living” trust.