Trusts can be a very useful tool for wealth management, estate planning, and protecting your legacy. They can help you avoid probate, protect assets from beneficiaries’ creditors, provide privacy, and save on taxes. However, they are complex legal arrangements that require careful consideration and expert guidance to implement properly. This article provides a general overview of trusts and does not replace an in-person consultation with a trusted professional.

How Do Beneficiaries Get Money From a Trust?

The heirs of a trust receive their inheritance under the terms outlined in the trust document created by the grantor. This can include provisions for the distribution of income, principal, or both. A trustee must manage the trust and distribute assets to beneficiaries according to the terms of the document. The trustee is often a family member or trusted friend, but it can also be an institution such as a bank, brokerage firm, or charitable organization. Beneficiaries can receive their inheritance as soon as the trust is dissolved, or it may be distributed over a period of time. Depending on the type of trust, there may be tax implications and requirements that differ by jurisdiction.

One key advantage of a trust is that it bypasses probate, which can be expensive, time-consuming, and public. However, this can come with some downsides. There is no judicial oversight of trust distributions, which may lead to conflicts or mistakes. Additionally, a trust may lose some of the protections against creditor claims and lawsuits that are offered through probate.

Another benefit of a trust is that it can be structured to allow assets to pass directly to beneficiaries, without being included in the surviving spouse’s taxable estate. This can reduce the cost of estate settlement fees, and it may help protect the surviving spouse’s privacy. However, it can also potentially be abused by someone who wants to avoid paying estate settlement fees.

To create a trust, you will need to work with an experienced estate planning attorney and coordinate with your financial and tax advisors. A trust can be a simple way to manage your assets, but the specific provisions should be tailored to your situation. It’s important to think about your goals, and build in protections if you’re concerned about a future health crisis or unexpected event. Spending a little time with an attorney now can save your loved ones from a lot of frustration and expense in the future.