According to national statistics, more than half of the adults in this country do not have an estate plan in place to address what should happen to their assets when they die. And the majority of those who do, only have wills. But as a trust attorney can explain, there are many estate planning tools that are available which can ensure your family’s future will be secure even when you are not longer here.
One such tool is a trust. There are several different types of trust, but many people stay away from using trusts as an estate planning tool because they are unsure of how trusts work or they are under the misconception that only the rich uses trusts and you have to be wealthy in order to set one up. The truth is that the majority of people can benefit in having some type of trust in place.
How Do Trusts Work?
When a person establishes a will, they give instructions on how their property should be distributed upon their death. A trust can do the same thing, but the process is different. The person creating the trust is referred to as the grantor or the testator. The person who receives the contents of the trust is called the beneficiary. The person who is in charge of managing the grantor’s assets and distributing them to the beneficiary is referred to as the trustee.
Often the grantor will appoint themselves as trustee and this way they maintain complete control over the assets of the trust. They then appoint a secondary trustee who will make sure the assets are distributed per the grantor’s instructions when the grantor passes away.
Trusts offer many more benefits over just having wills. As a grantor, you still have complete control over the assets in the trust. For example, if you plan on leaving all of your assets to your adult child but feel that they are not mature enough to handle receiving all of those funds at once, a trust allows you to set up stipulations as to how and when they will get funds from the trust.
Having a trust also means there is no probate for the assets that are held in the trust like there is for wills. This serves multiple purposes. Probated wills are available to the public, which means anyone will be able to find out how much money is in the estate and who the beneficiaries are. Trusts information are not available to the public. The probate process also takes approximately one year and involves legal expenses, as well.
Trusts also protect the beneficiary from any creditor or divorce actions that could result in seizure of the inherited assets.
Contact a Trust Attorney Today
If you would like to learn more about the different trusts available and how trusts can be used in your estate plans, contact a trust attorney in Sacramento, CA today to set up an initial consultation.
Thanks to the Yee Law Group for their insight into estate planning and what a trust is.