Do You Need a Trust or is a Will Enough?
You know you need a will, but do you also need a trust? Many people mistakenly believe that a will saves them the hassle of having a probate court involved. In fact, a will directs that a probate court become involved to take charge of the appointment of your personal representative and the distribution of your property. Court involvement = money paid to attorneys and court fees. Ouch!
What does a trust do? A trust can direct specifics assets be left to specific beneficiaries and under what conditions the property can be used for. Most people have trusts in order to protect their estate from tax liabilities, unwanted predators and creditors, and to avoid a lengthy and sometimes, expensive probate, or to keep the contents of their estate private.
What are the different kinds of trusts? There are hundreds of different kinds of specific trusts for all kinds of specific situations, but they generally fall into two categories; revocable trusts and irrevocable trusts. Some people have a preference for a revocable trust for the simple fact that they can be changed or eliminated by the grantor if they so choose. An irrevocable trust has more permanent terms.
Who is involved? There are many levels to setting up a trust. The grantor is the person who sets up the trust. The objectives can differ for estate planning purposes. Property and assets are listed in the trusts and legally known as trust property. Beneficiaries can be a single person, an organization, or any number of combinations of beneficiaries and organizations. The beneficiaries who benefit from the trust gain access to property and assets listed in the trust, but at a timetable determined by the grantor (which is helpful when identifying how minor children and others are allowed to use money or to specify that certain funds must be used for education or a charity, etc).
Another reason to set up a trust is to protect some of your loved ones who might spend the money recklessly and need to be protected from themselves, their less than honorable spouse or friends, or creditors laying in wait. In a trust you can leave stocks or mutual funds to charitable organizations or provide for long-term funding of a project of your choice. Couples can set up a trust together.
If this all sounds confusing, but you are wondering whether you need a trust, please see a qualified, honest, and credible estate-planning attorney.