A trust is a legal document that allows you to give control of your assets to someone else. It is an effective way to minimize taxes, protect your assets and spare children or other beneficiaries from going through probate. Trusts can be used for all types of assets, including cash, real estate, investments (stocks, bonds), and business interests.

A revocable trust can be amended during your lifetime, and you can also add to it as your needs change. For example, if you start participating in charitable activities that you’re passionate about or gain new grandchildren, you can amend the trust to include them as beneficiaries. It’s important to know that trusts are complex documents that should be drafted by an experienced lawyer. This can cost money, but some attorneys offer a basic trust package for a flat fee, so it’s worth interviewing lawyers to find one who has the expertise you need and is affordable.

You must decide who will act as trustee and how the trust will be managed. The trustee can be an individual or a corporation, and it’s helpful to choose someone who is organized and reliable. The trustee should be able to follow instructions and communicate clearly with the beneficiaries of the trust. An experienced, unbiased trustee can help you avoid family conflicts and provide professional management of your estate.

Once you’ve chosen trustees and determined how the trust will be managed, you must specify what your wishes are for distribution of the assets. For instance, you might want to distribute the assets in a lump sum or over time. You can also specify stipulations about when the trustee should give certain amounts to each beneficiary, such as when they reach a particular age or finish college. You might even want to set up an incentive trust that uses income or principal distributions as incentives for a particular behavior on the part of the beneficiary, such as maintaining good health or starting a business.

Trusts can also be designed to keep trust property away from creditors of your beneficiaries. This can be a beneficial feature for people with significant debt or for those who have been sued. In addition, a trust can be established with an endowment for educational purposes or for a specified purpose, such as supporting a family business or a nonprofit organization.

Depending on the size of your estate, it may be important to plan for taxes. Many types of trusts can reduce your estate, gift and income taxes. It is also important to consider state laws, which vary widely. For instance, some states require a minimum amount of assets to establish a trust. Other states have laws governing when a trust is taxable. In addition, some states have special rules for trusts that contain non-resident assets.