A trust is an estate-planning tool that allows you to transfer assets from yourself to a trustee for the benefit of someone else. While some people use trusts to minimize taxes, others may find that they’re useful for other reasons. A financial advisor can help you understand the advantages and drawbacks of a trust, and determine whether it should be part of your long-term financial plan.

While a trust is often associated with the wealthy, it can be useful for any family. Some common reasons to consider a trust include avoiding probate (which is time-consuming and costly), providing for loved ones with special needs, or helping with tax planning.

When you create a trust, you work with an attorney to draft the terms of the fund, which includes what you want to put into the trust and who will be in charge. You can also name beneficiaries like your children or grandchildren, a charity, or business partner.

You can set up a revocable or irrevocable trust. A revocable trust can be changed or terminated at any time. However, once you die, the assets are transferred to your successor trustee to manage and distribute according to your instructions. The trustee will have control of these assets, but the beneficiary won’t get direct access to them. The trustee will also be able to protect the trust assets from creditors and preserve state income tax benefits.

Trusts can also be used to plan for incapacity. This allows you to design a roadmap for how you’d like your trustee to care for you in the event of incapacity, such as a stroke or dementia. You can also use a trust to set aside funds for specific purposes, such as paying off a mortgage, paying for education expenses, or supporting a charity.

Some people are reluctant to use a trust because they believe it’s too expensive. While a trust can be more expensive than creating a simple will, the cost depends on how complicated and extensive your wishes are. An experienced attorney can provide a quote before you start the process.

If you have a lot of property that goes into the trust, you may not need to go through probate at all, since your assets will be transferred automatically. But if you have some property that doesn’t go into the trust, your will should include a “pour-over” provision to ensure it transfers after your death.

While there are many benefits of a trust, it’s important to weigh the pros and cons with your trusted advisor. You should also speak with an attorney to discuss your family’s situation and goals before adding a trust to your long-term financial plan. An experienced estate planning attorney can help you determine if a trust is appropriate for your unique circumstances, and will help you draft an effective document to achieve those goals. Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice and financial planning services are available through Schwab, an affiliate of LPL Financial.