A trust is a legal structure that allows a person to transfer assets into it and then manage those assets in accordance with the instructions, rules and guidelines specified in the trust document. It may also include provisions for the trustee to provide income to a beneficiary during a lifetime, or to pay a lump sum upon death. Trusts can be useful for reducing estate taxes, maintaining privacy and preserving the ability to qualify for government assistance programs like Medicaid.

Often, trusts are geared primarily toward high-net-worth individuals and families, but even those of more average means can benefit from them. For example, they can be used to ensure a disabled dependent receives care while preserving at least some of the person’s wealth, to provide ongoing professional management and avoid the expense of probate, to reduce family conflicts over money and inheritances, to carry out charitable intent and more.

There are many kinds of trusts, but a typical one involves transferring money or property to the grantor, who is usually referred to as a “settlor.” The grantor then designates a trustee (which can be an individual or institution like a bank’s trust department) and specifies how they will manage and distribute the trust assets to beneficiaries in accordance with the terms of the trust document. The trust document typically describes the type of assets being transferred, how the trustee will be selected, how long the trust will last and other important details.

The trust document is typically created by an attorney, but a financial advisor or other professional can also help. The cost of establishing and managing a trust can be substantial, and the price tag can grow even more if complicated trust documents are needed to meet specific goals or to take advantage of certain tax benefits.

Although a revocable trust can help avoid probate, it can still be subject to state and federal taxes. The costs of a trust can also add up over time if the trustee needs to hire outside experts or pays fees to other professionals such as investment managers and accountants.

For some, the idea of transferring their property to someone else can feel uncomfortable and risky. According to a Brown University professor, Rose McDermott, people who have higher concentrations of the hormone oxytocin (the chemical involved in social bonding and breastfeeding) are more likely to be open to trust.

A trust is not right for everyone, and it’s important to work with a trusted financial advisor and/or attorney to determine whether this type of planning is appropriate for your situation. If you’re considering a trust, start by talking to an attorney with experience creating them. They can explain the different types of trusts and choose the kind that best fits your needs. A lawyer can also work with you to ensure that the terms of your trust are clear and will not cause conflict in the future. The process can be expensive, but it could save your heirs thousands in fees on the back end.