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Many people create a Last Will and Testament to ensure their assets are properly distributed after they’ve passed away. However, a trust is another tool that can play an important role in achieving your estate planning goals. There are different types of trust, but when set up correctly, trusts offer many unique benefits that will protect your property, family, and legacy. The following guide explains how trusts work and the various types available to help you design an estate plan that meets all your needs.   

Understanding Trusts in Estate Planning

What Is a Trust?

A trust is a legal arrangement in which a third-party trustee is appointed to manage assets on behalf of a beneficiary. A trust can be established and be effective during your lifetime, or a trust can be established by your Will and only become effective under conditions which are determined by you.  When you establish a trust, it can be funded with assets such as real estate, bank accounts, life insurance policies, business interests, and investments. Your designated trustee will be in charge of seeing that your property is transferred upon your death according to the instructions you leave behind.

How Are They Beneficial?

estate planningOne of the desired advantages of a trust is that it allows assets to be distributed without passing through probate, which can be a lengthy and expensive process. Probate is also a matter of public record, so avoiding it will help maintain your privacy.

With a trust, you’ll also have more control over the terms of your estate administration. For example, you can specify the age that your minor children will receive their inheritance and how the money is spent. Additionally, certain trusts can be used strategically to lower estate taxes.

Different Trust Options

The main types of trusts in estate planning are revocable or irrevocable. Revocable trusts can be changed at any time while you’re still alive as long as you’re deemed mentally competent. In contrast, irrevocable trusts are permanent. Aside from these, there are several subcategories of trusts that can satisfy specific objectives.

For example, charitable trusts are irrevocable trusts that allow you to leave assets to one or more charity organizations. There are also special needs trusts where families can ensure children who have a disability will be financially provided for, and there are testamentary trusts which are created by your Will for the benefit of your minor children.  

 

If you’re interested in setting up a trust, turn to the estate planning attorneys at Hayes & Sarff, P.C. They’ll assist you in putting together a comprehensive estate plan that fulfills all your final wishes and provides your loved ones with maximum protection. For more than 50 years, this trusted firm has provided residents throughout Tazewell, Peoria, and Mason County, IL, with sound legal advice when preparing for the future. Call (309) 347-2101 to schedule a consultation, or visit them online for more information on how they can help get your affairs in order.

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