Utilizing trusts in your estate plan can be a very helpful way to save money and protect yourself (and your loved ones and beneficiaries) from estate taxes. Even though trusts are just a tool to help people building their estate plans, many people may shy away from trusts simply because they assume that a trust is too complex to get involved with.
However, we are here to tell you otherwise. Though there can be some stumbling blocks in the trust process, a trust really can be a vital part of anyone’s estate plan.
When you establish a trust, all you are really doing as the “trustor” (the person whose estate is in question) is transferring ownership of something to an intermediary (known as the “trustee”) so that it can be managed until the beneficiary of that item can assume control of it. The intermediary manages the asset (or assets) until the timing is right, and then the beneficiary gets to enjoy that asset.
There are many different types of trusts that can utilized. A living trust is done while the trustor is still alive. Irrevocable trusts work along the same lines, though the transfer of assets happens before death (and, thus, the trust is “irrevocable”). There are also charitable trusts that can be established by the trustor, and successor trusts which can be established in case the trustor becomes disabled.
Any of these trusts can be used by the trustor to adequately manage his or her estate, and these trusts can also be used to avoid probate or taxes.