Trusts: The Solution That Makes Preserving Your Assets Easier

When we hear the word “trust” in relation to financial planning and legacy planning , many of us automatically think about organizing vast estates or sheltering assets for large families. But, the reality is that trusts provide services that most of us could benefit from. Thanks to modern technology, more of us have access to this solution than ever before.?

A trust is a legal arrangement in which one party transfers assets to another party (the trustee). These are to be held and managed for the benefit of a third party (the beneficiary). Trusts are most commonly used for estate planning, asset protection, and charitable giving. However, these legal structures provide quite a few additional benefits. Let’s take a look.?

The Benefits of a Trust

There are many reasons and scenarios in which individuals and families, regardless of wealth, might leverage the features of a trust.

• To avoid probate: Trusts can help in avoiding the probate process, which can be time-consuming and costly. Probate can last anywhere from 6 to 18 months or more, depending on the complexities.?
• As a vehicle to protect assets: Certain types of trusts can protect your assets from creditors and legal claims.
• To take advantage of tax benefits: A trust can offer various tax advantages. These include reducing estate taxes and providing income tax benefits.
• For extra control and flexibility: Trusts allow you to set specific terms. Such terms dictate how and when the assets should be distributed.
• To protect loved ones: Trusts can ensure that assets are distributed according to your specific wishes. This is particularly important in blended families and families with children who have special needs.

The foundational principles of trusts played an important role in the development of American property and estate law. But, these founding principles expanded over time to support our diverse, ever-evolving societal needs.??

The Basic Types of Trusts

There are a multitude of options available when leveraging this legal tool. However, most trusts fall into one of three categories.?

• Simple Trusts: A basic, revocable living trust can be relatively straightforward. An estate planning attorney or online legal service can be especially helpful here. These trusts generally involve transferring ownership of assets to the trust and specifying how they should be managed and distributed.
• Complex Trusts: Irrevocable trusts, special needs trusts, and charitable trusts can be more complex due to specific legal requirements and tax considerations. These types of trusts often require detailed planning and professional advice to ensure they meet legal standards and achieve your desired objectives.
• Customized Trusts: The level of customization you might need can also affect the complexity. Trusts tailored to specific family dynamics, business interests, or very unique requests will typically require more detailed planning and drafting.?

Just as we recommend speaking to your healthcare provider when looking to make changes to your exercise or nutritional plans, we advise working with an estate planning professional or reputable online service when deciding to add a trust to your overall financial planning.?

How Trusts Function

Legal and financial solutions can sometimes feel a bit nebulous — especially to those who like to understand how these products work. You want to know how it will work for you and your family.?

• Establishment: The trustor works with a professional service to create the trust document, outlines the terms and conditions, and then has assets transferred into the trust.
• Management: The trustee manages the assets according to the stipulations outlined in the trust document and in accordance with all legal requirements, acting in the best interests of the beneficiaries.
• Distribution: The trustee distributes the assets to the beneficiaries as specified in the trust document, either during the trustor’s lifetime (for living trusts) or upon the trustor’s death (for testamentary trusts).

Getting Started

Historically, trusts have been designed and executed in partnership with an estate planning professional. But due to rapidly advancing technology and the leveraging of artificial intelligence, the legal documents needed to set up standard trust agreements are readily available from several online platforms. The top software and guided online platforms you might be interested in checking out are below.

• LegalZoom has a wide range of estate planning services, including the creation of revocable living trusts, irrevocable trusts, and special needs trusts. Pricing varies depending on the type of trust and level of attorney support chosen. Basic packages typically start around $279.
• Trust & Will provides an easy-to-use platform for creating revocable living trusts, wills, probate support, and other estate planning documents. Pricing for a trust package starts at $399.
• Quicken WillMaker & Trust offers a software-based solution for creating a variety of estate planning documents, including living trusts. The cost for the software package is a one-time fee of around $99.99, which includes updates for one year.
• Rocket Lawyer provides a broad range of legal documents and services, including living trusts, wills, and other estate planning documents. Membership is $39.99 per month, which includes unlimited access to documents and attorney consultations.

Trusts are versatile legal tools that can be tailored to meet a wide range of personal, financial, and charitable goals. Whether your lifestyle relates more to a silver spoon or a plastic fork, there is a trust available to help you meet your personal planning needs. The fine print: We advise consulting with an attorney or company specializing in estate planning to create a trust that best suits your needs and objectives.

P.S. Be on the lookout for part two of our discussion on trusts.?