Did you know that trusts aren’t just for the mega wealthy? Having one, or more, trusts in your estate plan can make sense, regardless of how much money or property you have. According to a recent article from Fortune, “Understanding trusts: An important estate planning tool for everyday Americans,” estate planning is less about dying and more about living. Most families create estate plans to take care of their families. A trust can help achieve this goal by providing privacy, asset protection and avoiding probate.
What is a Trust?
A trust is a legal document creating a three-way relationship between three different parties: the trust, the trustee and the beneficiaries. The trust is the legal entity holding title to the assets in the trust. The trustee is the trust’s decision maker, and the beneficiaries receive assets from the trust.
A grantor creates the trust and directs how assets will be used during the grantor’s lifetime and how those assets should pass to the beneficiaries when the grantor dies. Another reason to have a trust: assets pass directly to beneficiaries and don’t go through probate.
While the word “trust” may embody the idea of attorneys’ offices and courtrooms, they are legal and financial arrangements that most people use in their day-to-day finances. Business entities like LLC (Limited Liability Companies) have the same three-way relationship: the president of the LLC, the decision maker; the LLC itself, which owns the assets; and LLC members, who are like beneficiaries of a trust.
Your estate planning attorney will know which type of trust is right for your situation. However, they are created similarly. The grantor and their attorney agree about what kind of trust is needed, and the trust is established. The trust's language specifies how the trust assets should be managed and passed to beneficiaries. The grantor places assets inside the trust, removing them from the grantor’s ownership and estate. The grantor names a trustee who makes the day-to-day decisions for the trust, its assets and its beneficiaries. When the grantor dies, the trustee directs the assets' distribution according to the trust's terms.
Trusts offer a clear road map for your wishes, with many benefits when compared to a last will and testament.
Creating a trust is a powerful tool in estate planning, providing numerous benefits for individuals and families alike. At Vick Law, P.C., our dedicated team in Greenwood, IN, is passionate about helping our clients establish trusts that align with their unique goals and circumstances. With our experience in estate planning law, will guide you through the process, ensuring your assets are protected, your wishes are honored, and your loved ones are provided for. Contact Vick Law, P.C. today to schedule a consultation and take the first step towards creating a comprehensive estate plan that includes a tailored trust. Together, we will secure your legacy and provide you with peace of mind for the future.
Reference: Fortune (June 9, 2023) “Understanding trusts: An important estate planning tool for everyday Americans”