Estate planning is something that’s usually not at the top of a person’s to-do list, but it’s critical that all adults get this plan handled as soon as possible. This can give the creator of the estate the peace of mind that comes with knowing that their wishes are being clearly relayed. It also makes it easier for their loved ones because there are specific instructions to follow when the creator dies.
One of the most important duties of an estate plan is providing information about who is going to receive what assets when the creator dies. This can be done through the will, but that’s not the only option for getting assets to loved ones. Some individuals opt to establish trusts to handle this task.
What is a trust?
A trust is a legal tool that can hold assets for distribution after the creator dies. The creator can set terms for that distribution. There are a variety of different trust types, but they all fall under one of two primary categories—revocable or irrevocable.
A revocable trust is one that the creator can change or cancel when they feel the need. They retain control over the assets. Because of this, the protection of these assets is limited.
An irrevocable trust is one that can’t be changed once it’s funded. The exception to this is if the beneficiaries all agree to the changes or if the court approves them. The assets are controlled by a trustee, so they’re protected from claims by the creator’s creditors.
All trusts bypass the probate process, so the beneficiaries have more privacy than is possible if assets are passed down in the will. It’s also likely that the beneficiaries will be able to get their inheritance faster through a trust.
Individuals who are in the estate planning process should explore the option of trusts to determine if they can help them to meet their goals. Working with someone who’s familiar with this facet of estate planning and how it works to create a comprehensive plan is beneficial.