If you are considering making plans for when you die, you should contemplate making a trust. So, what exactly is a trust and what can you include in it? Also, who will have access to my trust and how does the process work?
What is a trust?
A trust agreement is a document that specifies the rules that you would like to have followed for property held in trust for your beneficiaries. The groups involved in the process include you, the grantor, the person who establishes the trust fund and puts the money or other property into the trust. The beneficiary is the person you would like to have benefit from your trust. The trustee is the person in charge of managing the property owned by the trust.
Some of the advantages include:
- It helps to reduce the amount of estate tax you would have to pay and avoid probate court. Probate can cost between five to seven percent of your estate.
- It can also protect property in your estate.
- You can put conditions on when and how you would like to have your assets distributed after you die.
- You can name a successor trustee, who manages your trust after you die. They also maintain the trust, if you are physically no longer able to do so.
- It protects your assets from lawsuits and creditors.
There are different types of trusts you can choose from. They include:
- Revocable trusts- this is transferred to your beneficiaries when you die. They also provide a better way to allocate assets outside of probate.
- Irrevocable trust – it cannot be changed by the trustor, once it is established. It is designed to assist those with estate taxes and shielding possessions from future creditors.
If you are considering making a trust fund, it is good to know what your options are when it comes to planning your estate. There are many different trust funds to choose from.