Could a trust be a valuable component of your estate plan? That depends on a variety of factors.

First, the basics. A trust is set up so that the trustee holds property for the benefit of other people. A living trust, which is set up while the owner of the property is still alive, is a popular estate planning tool. Some people create a trust that serves to distribute property when the property owner dies, similar to a conventional will, and this is called a testamentary trust. Some people with a testamentary trust also have a supplemental will. The testamentary trust is used for the transfer of property with the title, and the supplemental will is used for the remaining property.

A basic living trust can be used to transfer property without requiring it to go through probate, but it doesn’t provide tax benefits. An “A-B trust” can be used to reduce taxes. These trusts are commonly used to transfer assets to children. As long as one spouse is alive, he or she has full use of the property in trust. When the surviving spouse dies, the property passes to the child or children while avoiding onerous taxation.

Trusts can be revocable or irrevocable. A revocable trust allows the person who sets up the trust to change it or revoke it at any time. If the person who created the trust dies, the trust becomes irrevocable, and no one can change the terms.

Trusts are very popular because they allow the beneficiaries to avoid probate. They are also advantageous for people desiring privacy. The contents of a will are generally public, but a trust remains private.

In addition, a trust doesn’t have to transfer all property at once. For example, if you wanted to leave money for your grandchildren that would not be paid to them until they graduate from high school, you could do that.

In short, trusts are powerful and versatile estate planning tools that can meet a variety of needs. If you’re a high net worth individual, you would almost certainly benefit from incorporating trusts into your estate plan. If you’d like to discuss this process further, please get in touch with us today!