Establishing a trust is often an important part of the management of your assets and estate. A trust can help to ensure decedent’s assets are passed to their heirs precisely the way they are intended.
Trusts can either be irrevocable or revocable. The person who creates a revocable trust can change the trust at any time. An irrevocable trust can be more restrictive, but can offer greater protection for an individual and their family.
The most important part of establishing a trust is choosing the right trustee. The trustee is an important person because he or she will be responsible for the record keeping, accounting, tax planning, and the investment decisions. It is important for this person to be someone who is trustworthy. Often, individuals manage their own trust, but it is important to pick a backup trustee or successor trustee who is trustworthy.
The successor trustee should also be a person who is experienced in dealing with the difficulties of disturbing assets to beneficiaries. Often beneficiaries are not happy with the amount of his or her inheritance. For this reason, it may be beneficial to hire a professional trustee such as an experienced estate-planning attorney.
A trust can be beneficial for people with a net worth of at least $100,000 or with a a substantial portion of their assets in real estate or in a small business. A trust may also reduce the need for a probate, which can cost between 5 and 7 percent of the estate’s total value. There are other ways of avoiding probate and you should have a professional evaluate your individual circumstances and goals to determine if a trust is appropriate for your situation.
A trust is also a great way to put conditions on how and when the assets of the estate are distributed to a beneficiary. A trust can be designed to protect assets from creditors and lawsuits. Many estate plans include a will, a living will, a health care proxy, HIPAA release, and one or more trusts.
Assets can begin to be protected by some types of trusts once the asset has been titled in the name of the trust.