Trusts allow people to manage their estate and transfer assets in a way that complies with legal requirements and benefits them. They offer privacy by keeping the terms of a will or trust out of the public eye and can minimize taxes. A trust can also make it easier for beneficiaries to access government benefits and may help protect assets from creditors or misuse. Depending on the type of trust created, the trustee may have discretion to withhold distributions or can be required to invest and disperse assets according to specific terms.

The main advantage of a trust is the ability to avoid probate, which can be time-consuming and expensive for family members. It can also prevent a beneficiary from unintentionally disinheriting someone, can help ensure that special needs beneficiaries are provided for in the future, and provide protection against creditors or others who may try to claim heir property. The use of a trust can also help prevent disputes among heirs, as it sets out a clear plan for dealing with the estate.

To set up a trust, a grantor (the person who creates the trust) places property in it while they are alive, and then names themselves as trustee or appoint a successor trustee. The trustees must take care of the grantor’s property during his or her lifetime, and distribute it to beneficiaries after death.

Trustees must also manage the trust during their lifetime, making responsible investments that can generate income for the beneficiaries. During this period, the trustees can also keep some of the trust assets in cash to pay for living expenses. This can be a good way to save on taxes, because the trust will only be taxed on any income it earns, not the capital gains from selling stocks.

There are different types of trusts, including revocable and irrevocable trusts. The revocable trust can be amended or dissolved at any time by the grantor, while the irrevocable trust is permanent and cannot be changed once it is established. Irrevocable trusts can protect assets from creditors and other claims made against the grantor, but they must be carefully planned to meet specific legal requirements.

Trusts are mainly used by high net-worth individuals and families, but people of more modest means can also benefit from them. For example, a spendthrift trust can protect assets from the beneficiary’s creditors or misuse, and a special needs trust can hold assets for a disabled person without affecting their eligibility for government benefits.

A lawyer who has experience creating trusts can discuss your individual situation and recommend whether or not a trust is right for you. A lawyer can also help you draft a trust that meets your goals, and can coordinate with other professionals who can assist with the trust creation process. These professionals could include financial advisors, a tax attorney and an estate planning attorney. In addition, a lawyer can help you decide what assets to place in the trust and can ensure that it is properly executed.