What is a Trust?
A trust is a fiduciary agreement that allows the trustee to hold assets on behalf of a beneficiary or beneficiaries. A trust has many different functions and deciding if one is right for you is a personal decision. Some trusts (Living Trusts) are use to avoid probate but this only works if the trust is created and funded properly. Another type, testamentary trust, is created in the will and takes effect after the death of the Settlor.
Who is involved in a Trust?
A trust must have three parties involved to be considered valid, in some cases one person can serve all three functions. The Settlor is the person creating the trust. A Trustee is named in the Trust and is used to administer the trust according to the terms in the Trust Agreement. The Beneficiary is the person who will benefit from the use of the property or the funds held in the trust.
What are the benefits of creating a Trust?
If created and funded properly a trust can avoid probate and allow the property and assets within the trust to pass to the beneficiary faster. With a trust you would also have control of your wealth – deciding whom and when the assets will be distributed. In some cases a revocable trust can be set up which would still allow you complete control over your assets but then after death the assets would be distributed per the guidelines in the trust agreement. A trust also provides privacy as the assets are kept private whereas when a will is probated all assets must be disclosed to the court and become public record.
Why does a Trust cost more than a Will?
A trust is generally more complicated than a will because it requires planning to maintain and manage your property for the remainder of your life. Also for a trust to function properly it must be funded which means placing all current property and assets into the trust. This takes considerable more time to completely as many documents must be executed properly to make this happen. Once a will is created no other action is required until your death.