More than half of Americans do not have any estate planning documents in place at all. Those that do most often have a will and nothing more. However, there are many estate planning instruments above and beyond a last will which can be greatly beneficial. One of these instruments is a trust.
Some people shy away from trusts because they do know exactly how trusts work or how a trust can benefit them and their family. Others assume that only the wealthy require trusts to handle the distribution of assets after their death. Neither of these estate planning myths is true. Read on to learn about the basics of trusts and how a trust may be able to work for you.
How a Trust Works
In a last will and testament, an individual writes directions for how his or her property should be distributed to heirs upon his or her death. A trust can also address how property is passed down to beneficiaries, but in a different way. A trust establishes an agreement between a testator and a trustee. The testator is the person creating the trust and may also be referred to as a settlor or grantor. The trustee is tasked with managing the settlor’s assets and distributing those assets according to instructions contained in the trust. The trustee is a fiduciary with a legal obligation to follow the terms of the trust and avoid any self-dealing or conflicts of interest in managing assets contained in a trust.
A Trust Offers Many Unique Benefits
There are many benefits to establishing a trust. A trust gives you much more control over exactly how your estate is managed and your property is distributed than a will does. Some people establish a trust in order to prevent beneficiaries from using poor judgment or being wasteful with their inheritance. Others use a trust to avoid the public probate process which all wills must go through. A trust can also help protect assets from beneficiaries’ creditors or protect premarital assets from being divided upon divorce.
Some trusts are designed to financially support the settlor if he or she becomes incapacitated by illness or injury. Trusts can also be vastly beneficial for individuals who have assets which are not easily divisible such as pets, vacation homes, commercial real estate, and business assets. The most common types of trusts include living trusts, children’s trusts, special needs trusts, pet trusts, and dynasty trusts.
Contact a Lombard Trust Attorney
For sound legal advice from an experienced DuPage County estate planning lawyer, contact A. Traub & Associates. We can help you develop a personalized estate planning strategy which meets your unique needs. Call us at 630-426-0196 to schedule a consultation.