A trust can be an important and helpful component of an overall estate plan that many estate planners may not fully understand but should. Trusts are one type of estate planning tool that can either be used to supplement a will or replace a will but estate planners should have guidance to ensure they develop an estate plan that is best for them and utilize estate planning tools in a way that meets the needs of their unique estate.
To create a trust, the estate planner or property owner transfers legal ownership of the property to a trustee to manage for the benefit of another person they designate as a beneficiary. The property must be transferred for the trust to become effective so that is an important step to complete. It is also important to note that there are different types of trusts that can achieve different purposes.
There are generally two categories of trusts including testamentary trusts and living trusts. Living trusts may be revocable or irrevocable. A trust, like a will, can help the estate planner ensure their wishes for how their property will be distributed are honored and fulfilled. A trust allows the estate planner to specify the conditions for the benefits to be distributed which can be distributed over time rather than as a single gift. The way that living trusts operate and become effective differs from testamentary trusts so estate planners should also understand those details and how they may impact the probate process.
Estate planning can help estate planners put their concerns at ease and provide for their loved ones according to their wishes. Trusts are one type of estate planning tool to help them achieve their goals and desires for their estate plan.