Trusts serve several purposes.
What mental images are formed when you think of trust?
Do you think of millionaires?
Thurston Howell III and Lovey, perhaps?
Although trusts can certain help preserve wealth, they are not only for the rich.
This was recently confirmed by a Stamford Advocate article titled “Trusts are not for the wealthy only.”
In fact, trusts are a versatile estate planning tool for average folks like you and me.
The creator of a trust is know as the “trustmaker,” also known as a grantor, settlor, or trustor.
The trustmaker determines both the trustee and the beneficiaries.
When creating a trust, you should work with an experienced estate planning attorney.
Different types of trusts fulfill different functions.
There are two primary categories.
The first is a revocable—or living—trust.
This trust can be changed and managed by the trustmaker.
The second is an irrevocable trust.
This trust cannot be changed and the trustmaker does not retain control.
Although there is less flexibility, there are unique tax benefits to an irrevocable trust.
Why might someone use a trust?
For starters, trusts can be used to shield assets from creditors, bypass probate, minimize estate or income taxes, facilitate charitable giving, providing for an child with special needs, and manage business succession.
You can also use them to privately transfer assets to heirs, protect assets from family remarriages, and control over investments.
As a more complex estate planning tool than a last will and testament, trusts typically cost more to establish.
Much like Goldilocks and the Three Bears, for some a trust is too much, for some it is too little, but for some it is just right.
Work with an experienced estate planning attorney to ensure that a trust is appropriate for your needs and goals.
Reference: Stamford Advocate (Jan. 19, 2020) “Trusts are not for the wealthy only”