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What are the Basics of Trusts?

As an essential tool in securing your legacy and protecting your loved ones, trusts offer a range of benefits that go beyond a traditional will. Join us as we demystify the basics of trusts, empowering you with the knowledge to make informed decisions for your estate plan. Let's explore how trusts can help you achieve your long-term goals and provide peace of mind for the future.

Fortunes’ recent article, “Understanding trusts: An important estate planning tool for everyday Americans,” explains that at its core, a trust is a legal document that creates a triangle-like relationship between three different parties: the trust, its trustee, and its beneficiaries.

  1. The trust is the legal entity that holds title to the assets;
  2. The trustee is the trust’s decision-maker; and
  3. The beneficiaries are those who receive assets from the trust.

A trust—created by the grantor—says how assets can be used during their lifetime and how they should pass to the grantor’s beneficiaries when they die. Trusts offer an added estate planning perk: avoiding probate. And while the word “trust” might be intimidating, they’re just arrangements that most people already use in their day-to-day finances.

Are All Trusts the Same?

There are different types of trusts, they all work the same way. The grantor establishes the trust and specifies how the assets in the trust should be managed and transferred to the beneficiaries at their death.

The grantor will put assets in the trust, which removes the assets from the grantor’s name and estate. In addition, the grantor names a trustee, the person charged with making the day-to-day decisions for the trust, its assets, and its beneficiaries. When the grantor dies, the trustee will direct the distributions of assets held in the trust according to the trust’s terms.

Understanding the basics of trusts is key to creating a robust estate plan tailored to your needs and objectives. At Vick Law, P.C., our dedicated team is committed to guiding you through every step of the estate planning process, ensuring your wishes are honored and your loved ones are provided for. Contact us today to schedule a consultation and discover how trusts can play a pivotal role in securing your family's financial future. Let us be your partners in building a comprehensive plan that stands the test of time.

Reference:  Fortune (June 9, 2023) “Understanding trusts: An important estate planning tool for everyday Americans”

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