The foundation of any comprehensive estate plan is a Last Will and Testament; however, for many people, an estate plan also includes one or more living trusts. Trusts have come a long way over the last century, meaning they are no longer used only by the rich and famous. In fact, putting your trust into a trust may be the smartest decision you ever make.
At its foundation, a trust is an arrangement by which one person holds assets or property for the benefit of another person. A living trust is a trust that becomes effective during the grantor’s lifetime. All trusts require four basic components – a grantor, a trustee, one or more beneficiaries, and assets used to fund the trust. Beyond the basics, a trust can be as simple, or as complex, as the grantor wishes it to be.
Trusts offer numerous benefits that many people may not be aware of, including:
- Estate tax avoidance
- Probate avoidance
- Asset protection
- Continued control over assets
- Charitable giving opportunities
- Personal income tax benefits
Living trusts have grown and developed over the years to the point where there is a trust to fit almost any estate planning goal or objective. Are you trying to protect assets for Medicaid planning? Try creating an asset protection trust. Do you need to shelter assets to support a special needs child? Creating a special needs trust may be the answer. You can even ensure that the family pet is well cared for long after your death by including a pet trust in your estate plan.