What is a Trust?

What is a Trust? A trust is established when property of some sort (an account, a home, some personal property, any property) is transferred to an individual “in trust” for the benefit of some other individual, group of individuals or organization.  A trust can hold title to very little property or millions of dollars of property.  Trusts can be established during your life, at your death or after your death.  Trusts can be established to benefit you, your family, your descendants, a social or religious organization or any myriad of individuals, companies or organizations.  Put simply, a trust is a vehicle by which one person holds property for the benefit of another person.

General Benefits of a Trust:  A discussion of the benefits of a trust merits a lengthy and entirely separate article.  However, there is some value to understanding a few of the various reasons why someone would want or need to establish a trust.  These benefits are entirely dependent on the details of individual circumstances.

(a) avoidance of the cumbersome (and expensive) probate process

(b) avoidance or reduction in gift and estate taxes (so called “death taxes”)

(c) providing for children and other descendants in an organized and prepared manner

(d) increased control over property upon death

(e) creation of incentives for behavior and accomplishment among descendants

(f) increased flexibility regarding planning for incapacity and death

(g) creation of on-going funding for charitable or religious organizations

(h) potential reduction in tax burden on life insurance proceeds

(i) privacy in financial and personal affairs regarding distribution of property

Do I Need a Trust? Trusts are for more than just ultra-wealthy individuals.  While not everyone may need or want a trust as part of their estate plan, the following circumstances may indicate a need to more seriously consider the option of establishing some form of trust:

(a) your need or desire to avoid the probate process

(b) your need or desire privacy in property distribution (trusts are not public record)

(c) you want to establish on-going funding for your family or a charitable organization

(d) you have significant net worth

(e) you want to retain some control over the money and property you pass on