Trusts are more than just estate planning tools for the rich and famous, they are legal tools that allow you to transfer whatever you own to your loved ones without the hassle, delay and expense of going to court, put conditions on how and when your assets will be distributed after your death, and can also help manage property later in life.
One of the primary purposes of estate planning is to ease the burden of your passing on your loved ones. This includes reducing the costs to your estate and ensuring the full, fast and proper distribution of your property. Using a trust as an estate planning tool helps meet this goal, as a trust allows property to pass outside of probate, the legal process which administers an estate. Not only can this save on probate court costs, but can distribute these assets more quickly, as well as put terms in place to help manage and distribute those assets in a way that benefits the beneficiaries named in the trust documents.
In fact, a living trust can also help manage your financial affairs should you no longer be able to do so on your own due to age, illness or other incapacitation. Establishing a trust involves working with a trust attorney to draft the legal documents, and a simple, living trust may involve the following tasks:
1. A Grantor establishes a Trust to benefit beneficiaries that they name.
2. The Grantor transfers an asset or assets, such as a piece of real estate, to the Trust, which is known as funding the Trust.
3. The Grantor names a Trustee to manage this asset. In a living trust, the Grantor can also act as the Trustee, and name a Successor Trustee to take over when they pass away.
4. The property is managed by the Trust. When the Grantor passes away, the property does not go through Probate, since the property is owned by the trust rather than the deceased. The Successor Trustee takes over the Trust administration duties.
5. The Trustee manages the Trust to benefit the named beneficiaries, which can involve selling the property and distributing the proceeds to the beneficiaries, thus terminating the Trust.
As you can see, this estate planning tool could benefit many estates, not just those of the wealthy – in fact, many modest-sized estates can benefit from many of the estate planning tools that are used within a comprehensive estate plan. Working with an estate planning attorney ensures that you have the legal documents and plans in place that meet the needs and goals of your family.