Most people understand that the foundation of many estate plans is a Last Will and Testament (commonly referred to as, simply, a Will). This estate-planning document can leave certain assets to specific beneficiaries, name successor guardians for your minor children, and accomplish other things. Besides a Will, one of the documents most commonly used in estate planning is a trust. There are many types of trusts, but what all have in common is the creation of a three-party relationship.
These three parties are the trustor (sometimes called settlor or grantor), trustee, and beneficiary. The creator of the trust places assets and property within the trust to fund it, while a successor trustee is designated as the party responsible for handling the trust’s assets when certain conditions are met (such as when the trustor passes away or loses mental capacity). This successor trustee will then distribute the assets to the beneficiary as outlined in the trust’s instructions.
If you create a trust to be included in your estate plan, you and your family will realize certain benefits. Three such benefits are:
1. Trusts allow the decedent’s family to avoid probate court after death. After someone passes away, certain assets must pass through probate court. The function of probate court is to settle estates of people who pass away. If you place all of your probate assets into your trust, then your loved ones will generally be able to avoid probate court altogether. This is not the case if you simply have a Will.
2. A trust allows you to place conditions on your assets. There are many reasons why you would not want your children, grandchildren, and other beneficiaries to not immediately receive their full inheritance as soon as you pass away. This could be due to the simple fact that your children are minors and they need a secure location to keep their assets. Another reason could be that you want a beneficiary to lose substance abuse issues. Regardless of your reasoning, there are ways you can design your trust to align with your needs and goals.
3. The contents of a trust are confidential. Relative to a Will, a trust does not usually become a matter of public record. This can give your family some privacy during what is already an emotional and difficult time. Additionally, it can shelter your loved ones from those wanting to financially exploit and target those who recently received an inheritance.
Conclusion
A trust can be quite useful when you are putting together your estate plan. It provides you and your loved ones a sense of financial security that cannot necessarily be accomplished by a Will by putting certain assets in one bucket that can then be managed according to the trustor’s wishes.
The best way to know whether or not you would benefit from placing your assets in a trust is by conferring with a competent estate-planning attorney. Call Velazquez Consumer Law, LLC at 630-576-9030 to receive a complimentary case evaluation today.
Velazquez Consumer Law
