A trust is essentially a “box” that can hold your assets. Instead of having the deed to your house titled in your name for example, the deed would be in the name of the trust, such as the Smith Family Trust.
This small change in how your assets are titled can provide some extensive tax breaks and can also protect your estate from going to a non-family member during a divorce or being seized in a lawsuit.
And here’s how it works:
There are three basic parties to a trust:
- The Trustor (also called a “Settlor”) who establishes the trust and provides the assets it holds
- The Trustee who manages the trust and its assets. This can be a person, a business or an organization.
- The Beneficiary who receives the benefit of the assets in the trust.
Now, these three parties do not have to be different people – quite the contrary, you can be the Trustor, the Trustee and the Beneficiary, allowing you to have complete control over your assets while still protecting them from a variety of third party claims.
The trust can be revocable, meaning you can change or even cancel it at any time, or irrevocable, meaning that once the trust is established, it’s there for good.
Trusts can also be used to provide for disabled dependents after you’re gone, by allowing them to benefit from the assets in the trust without affecting their eligibility for government-assistance programs.
Trusts can also help you avoid probate, a lengthy and often costly process of distributing assets after you pass on.
To learn more about trusts and decide if there’s one right for you, give us a call today.