A trust is a legal entity that holds assets, such as cash, investments and even real estate, for the benefit of one or more beneficiaries. The trustees manage and distribute the assets in accordance with the trust’s terms and conditions, as established by the grantor. The assets held in a trust can be used for a wide variety of purposes, including providing for children, heirs with special needs or charitable causes, and supporting family business interests. In addition, trusts may offer tax efficiencies or benefits.
As people live longer and health care costs continue to rise, protecting the inheritance of loved ones against the potential of financial vulnerability or incapacity can be a major concern. Trusts can provide protection against these risks by separating out-of-control assets from personal finances. A trust can also protect family wealth against creditors, lawsuits and other financial vulnerabilities.
A trustee must be someone you trust to objectively carry out your wishes. You can choose a person or a corporation, and in either case you will need to make sure they agree to serve. A trustee is a fiduciary and must comply with the highest standard of duty and liability, as defined by law. If a trustee becomes incapacitated or is unable to serve, they must be replaced either by the designated successor trustee (or another trustee if there is no successor) or unanimously by all beneficiaries of the trust.
Setting up a trust can be as simple as executing a legal document or as complex as an entire estate plan. An attorney can help you create a trust document that is customized for your specific situation and goals. A revocable trust can be amended at any time, as your circumstances change. This can be important because you may become involved in a charity that you want written into your trust, or you may have a new grandchild you want to include.
A trust can be a useful way to manage the financial security of loved ones with special needs, such as those with mental disabilities or those who require long-term medical care. Creating a trust can also allow you to maintain privacy and prevent the details of your financial affairs from being made public as part of the probate process. It can also help to avoid costly mistakes that can be made when heirs receive their inheritance too soon, or are too young to invest and manage it themselves. In addition, you can name a professional money manager as the trustee to provide guidance and support to your loved ones. This can help ensure that your trust is managed as you intend and can make it a success for generations to come. If you would like to learn more about establishing a trust, contact us today. We will be happy to discuss your concerns and goals in greater detail and provide you with the tools you need for a solid financial future.