If you’re like most people, you know that you need a will to pass along your assets once you die. You may also be hearing about Trusts, another estate planning tool to ensure that your assets will be distributed in the way you want them to be.
Now is the time to ask yourself, “Do I need a trust?”
What is a Trust?
A trust is a legal entity that holds assets, such as cash property, that are intended to provide benefit to an individual, group or organization.
A trust is an excellent way to ensure that someone you care about will be taken care of once you pass away. It can involve the distribution of assets or protection of minor children or disabled children or adults. Three members are involved in a trust: 1) the grantor, or the person who establishes and funds the trust; 2) the beneficiary(ies), the person or group who benefits from the trust without owning it; and 3) the trustee, the person responsible for managing the trust property (can be an individual or an organization like a legal firm or bank.)
Do I Need a Trust?
Recommendations from CNN Money suggest that a trust is advisable if “you have…very specific instructions on how and when you want your estate to be distributed to your heirs after you die.”
Do I need a trust? The quick answer is “no.” In most cases, a Will will suffice. (Contrariwise, you do need a will whether or not you have a trust.)
But it is something you may want to include in your estate planning. Here are some of the benefits of establishing a trust:
- It can ensure that your property distribution wishes are carried out under your conditions. If you wish to allow a surviving spouse to remain in the home, for example, this can be defined in the trust.
- It can create a distribution of your assets over a period of time, like an allowance. This is ideal for minor children, for example, until they come of legal age.
- It can include items not normally covered in a will. These can include retirement plans and life insurance policies.
- It is private, whereas a will becomes a public document after your death.
- It can live on after your death.
How to Set Up a Trust
To set up a trust, you will need to (a) appoint a trustee (which can be you), (b) transfer or set up a future transfer of assets to the trust, and (c) draft a trust agreement which guides the trustee on how to manage and use the trust assets. The trust agreement will specify how and when your beneficiary(ies) will receive the trust assets.
Since the creation of a trust is complicated, it is advisable to use the services of an Estate Planning attorney, like The Law Office of Joshua E. Hummer, PLC, located in Winchester, Virginia.
Want to Create a Trust?
If you want to create a trust, or simply have questions like “Do I need a trust?”, consult with your local Estate Attorney. Contact The Law Office of Joshua E. Hummer, PLC.