Trusts are a type of estate planning tool that can come in handy in a number of ways. Wills, trusts, advance healthcare directives and powers of attorney are all estate planning tools that estate planners should consider when considering the best estate plan for them.
A trust is created when the legal owner of property transfers the property to another party, usually a person or institution, to be managed for the benefit of the beneficiary. The party managing the property is referred to as a trustee. There is a fiduciary relationship between the trustee who manages the property and the beneficiary. It is important that the trust property is transferred for the trust for the trust to be validly formed.
There are two broad types of trusts including testamentary trusts and living trusts. A trust can be party of a will. A testamentary trust is for after the estate planner passes, while a living trust can begin during life and continue after the estate planner passes. In addition, a living trust can be revocable or irrevocable. The trust process can be used as an estate planning tool that can avoid the probate process which can be a costly process and may take time to complete.
As a result, it is important for estate planners to understand the different types of estate planning services and options, including trusts, as well as wills and other important components of an overall estate plan. An estate plan that meets the needs of an estate planner can help ensure their wishes are honored and provide peace of mind at the same time.