A trust allows a grantor to transfer property to an entity to manage it according to the guidelines, rules and conditions set forth in the trust document. A trustee then invests, manages and distributes the trust’s assets for the benefit of one or more beneficiaries. Trusts are often used to facilitate the transition of wealth to family members, to help minimize taxes, or for purposes such as avoiding probate, preserving privacy, protecting against creditors and reducing state income taxes.

It is also an effective tool for ensuring that a loved one’s wishes are carried out in the event of incapacity. Many people choose to create a special needs trust to make sure that the assets transferred into their trust are managed and distributed according to their specific goals and requirements.

The most important decision in establishing a trust is the person who will serve as trustee. This person is a fiduciary who must comply with the highest standards of ethical conduct and fulfill the obligations of the role. A trusted friend, family member or financial professional can serve in this capacity. Ideally, the trustee should be astute in business matters and have a high level of ethics.

Creating a trust is a complex process and involves drafting a legal document. A trusted professional can guide you to the type of trust that best suits your needs and can ensure that the trust document is drafted properly, achieves your goals and holds up in court should it be challenged.

Trusts can be expensive. The cost depends on the complexity of the trust, the assets included in it and the distribution stipulations.

It’s also important to consider the potential tax efficiencies or benefits, and the level of legal protections offered. A knowledgeable attorney can help you determine what type of trust will be most beneficial to your family’s circumstances.

While it is possible to do a basic trust yourself through an online service, it is recommended that you work with a trusted financial professional to create a revocable living trust. They can assist you in the creation of a complete plan that can protect your privacy, limit the time and expense of probate, minimize conflict and safeguard against incapacity or other legal issues.

Once a trust is established, it’s important to communicate with the trustee and keep him or her informed about your wishes, assets and investments. This ensures that the trustee is able to meet his or her responsibilities and that you have a clear line of communication in case of any questions down the road. This can also help prevent disputes between beneficiaries.