The word “trust” may sound intimidating, but when it comes to your estate plan, trust can help ensure your wishes are carried out after you pass away. A trust is a legal arrangement that allows you to transfer funds and property to someone else to manage, while maintaining some control over the assets. Depending on your goals, trusts can be used for everything from protecting assets from creditors and lawsuits to keeping assets out of the hands of untrustworthy family members who might be tempted to sell or spend them.
The person who creates a trust is called the grantor or settlor, and they establish the trust by signing a legal document to transfer ownership of their assets to the trust. This process can include changing the title on a piece of real estate or transferring a bank account into the name of the trust. Once the trust is established, a trustee (or trustees) is named to manage and distribute trust assets according to the terms of the trust document. The trustee can be an individual, a corporation or a combination of both.
A trust can be a useful tool for minimizing taxes, as the trustees can manage assets to maximize tax efficiency and can also structure distributions to beneficiaries so that they receive the most benefit possible. The trustee can also be a vehicle for passing on a business or other family entity to the next generation while avoiding the high capital gains and gift taxes often associated with those transfers.
There are many different kinds of trusts, and each one has specific rules that must be followed by trustees and beneficiaries alike. But what all types of trust have in common is that they are founded on a certain level of vulnerability and risk, whether it’s the possibility that the trustee will betray the trustor or the trustor’s own sense of being vulnerable. This vulnerability is what philosophers refer to as “trustworthiness.”
It’s important to understand the role of both a trustee and a beneficiary in order to make sure that the trust is being managed properly. While some people choose to act as both the grantor and the trustee in their own trust, others decide to appoint a separate trustee. In any case, the trustee has a fiduciary duty to act in the best interests of the beneficiary.
The main purpose of any trust is to protect your family’s wealth. By working with an experienced attorney, you can make sure that your wishes are reflected in the trust that will be administered after your death. This will help you feel confident that your loved ones will receive what you want them to have, and you can rest assured that the assets you leave behind will be taken care of the way you envisioned. This is why it’s important to talk about your goals and concerns with an attorney before you decide on a trust for your own estate.