“happy dance” by sun dazed is licensed under CC BY-SA 2.0.
A trust is a legal tool that helps you manage and protect your money, property, or other assets while you’re alive and after you pass away. It’s like creating a special container for your belongings, where you can set the rules about how and when they’ll be used or given to others.
The person who creates the trust is called the grantor, settlor, or trustmaker. They put their assets into the trust and decide who will manage it (the trustee) and who will benefit from it (the beneficiaries). The trustee makes sure everything in the trust is handled according to the grantor’s wishes.
Trusts can help with a variety of things, such as:
- Avoiding probate: This means your loved ones can inherit assets without going through a long legal process.
- Protecting assets: A trust can safeguard money or property for young children, people with special needs, or family members who might not manage money well.
- Saving on taxes: Certain types of trusts can reduce taxes on large estates.
- Keeping things private: Unlike a will, a trust isn’t part of the public record, so your financial details stay confidential.
Trusts can be as simple or as detailed as you need, depending on your situation. If you’re thinking about creating a trust, it’s a good idea to talk to an estate planning attorney to make sure it fits your needs and goals.
Revocable Living Trusts
Revocable Living Trusts (RLTs) are the most common type of trust. They are created primarily to avoid probate and provide for ease of administration of your estate. If structured properly, a revocable living trust is “disregarded” while the trustmaker is living and all income is taxed at the trustmaker’s tax bracket (and not the extremely high trust tax rates).