When people consider estate planning, they're normally thinking about a will. Although a will can be an integral part of an estate plan, it's not the only document that can protect your family and assets. In fact, there are many estate planning tools that you can use to protect you and your loved ones both in life and after death. A trust is a dynamic estate planning tool that offers a lot of unique benefits to suit your specific needs. In this blog, we will discuss trusts and how they can work for you.
What Exactly Is a Trust?
A trust is a legal entity that is established by a grantor to hold property or assets on behalf of another person, group, or entity, also known as beneficiaries. The grantor may name a person or entity, also known as a trustee, to hold the assets on behalf of the beneficiaries. The trustee manages and distributes the assets in accordance with the instructions outlined within the trust.
Trusts are a great estate planning tool because of their flexibility. They can be created to protect an inheritance, provide a framework for the financial needs of minor children or incapacitated adults, protect assets from creditors and the probate process. There are several types of trusts and the specifics outlined within them depend on the grantor's goals and circumstances. For example, a grandparent may want to leave their grandchildren money for their inheritance, but they want to make sure that the money isn't squandered. The terms of the trust can dictate when the funds can be released, how the funds are used, and who has access to the funds.
Revocable and Irrevocable Trusts
A trust needs a few things to function properly: a grantor, a trustee, beneficiaries, and assets. The specifics of how these components are linked can change throughout someone's lifetime, but the overall goal of the trust still needs to be executed. To mitigate this, there are two main types of trusts: revocable and irrevocable trusts. A revocable trust can be changed or revoked during the grantor's lifetime. It's often used to avoid probate and ensure that assets are distributed in accordance with the grantor's wishes. One reason to use a revocable trust is if your circumstances have changed, or if you need to add or remove any beneficiaries. Life has a lot of unexpected changes, so it's a popular choice for families.
An irrevocable trust, just like it sounds, cannot be changed or revoked once it's established. It has a lot of the same benefits that a revocable trust has, with the added benefit of being airtight. It's often used to provide for beneficiaries both in life and after death. For example, if someone needs to ensure that their special needs child is cared for even in adulthood, they can set up an irrevocable special needs trust to enable them to maintain a good quality of life without the fear of the trust being altered against your wishes.
Benefits of Trusts
Unlike a will, you can set up several trusts in accordance with your wishes. As previously mentioned, it can also help you avoid probate, which is a time-consuming and expensive legal process that your loved ones will have to go through whether you have created a will or not. Even with a will, there is no guarantee that it will be carried out without dispute. A trust can help ensure that assets are distributed efficiently and in accordance with your wishes. The exact parameters of your trust will depend on your circumstances and provide you with a greater amount of control regarding the distribution of assets. NCLegalDocuments.com offers a variety of estate planning document packages that make estate planning accessible to everyone. To start your trust, Click to select your trust, or by calling 704-492-2588.