Besides the Last Will and Testament, which is considered to be the most basic and foundational estate planning document, the next most common document for estate planners is a trust. A trust has a few characteristics in common with a Will, but it can do several things that a Will cannot. This blog will provide a general overview of trusts and their usefulness in estate planning.
There are three people involved in a trust: the grantor (sometimes referred to as the “trustor” or “settlor”), the trustee, and the beneficiary (or beneficiaries). The trustor is the one who creates the trust and funds the trust with property and assets, which will eventually be passed on to the beneficiary. The trustee is named by the trustor to manage the contents of the trust according to the document's instructions.
So, why would someone create a trust? There are a few benefits of creating a trust, including:
Generally, a trust can be designated as either revocable or irrevocable. Revocable trusts can be amended or revoked by the grantor (person creating the trust) as long as the grantor has capacity. Irrevocable trusts, however, are not able to be changed by the trustor (except in rare circumstances). Revocable trusts, also known as living trusts, are a little more expensive to create and maintain, which is why some trustors opt for irrevocable trusts.
Fundamentally, most trusts are nearly identical in their structure and purpose: to act as a bucket or basket for assets so beneficiaries can receive those assets in an efficient and effective manner. Within that structure, though, there are various provisions that trustors can institute:
While trusts are useful for many estate planners, that may not be the case for you and your financial situation. The surest way to create a plan that accomplishes your goals and takes care of your loved ones after you are gone is to consult with an experienced attorney like Bashirah Martin. You can get in touch with our firm here through the website or call us at 281-747-1326.