What are trusts?
By way of background, a trust is a separate legal entity that owns and administers property for the benefit of your designated beneficiaries. One or more Trustees are appointed to administer the trust pursuant to the document’s precise instructions. Trustees are fiduciaries who are held to a higher standard of care, so they must adhere to the trust’s instructions at the risk of being held personally liable for damages relating therefrom. Trusts can be provide enormous flexibility and control to the creator’s wishes with respect to the devise of trust property to the creator and his or her beneficiaries including who receives it, when they receive it, how they receive it, under what conditions they receive it, all of which can happen both during the creator’s life and after death.
Like all tools, there are many kinds of trusts and numerous advantages and disadvantages of each kind of trust. They are not for everyone but they should at least be a consideration in everyone’s estate plan.
Advantages include organization, structure, longevity, *asset protection, contingency planning, and avoiding court, costs and conflict. Disadvantages include exposure to higher taxes, administrative fees and professional fees.
To learn more about trusts, read this post, which includes a visual presentation.
To learn more about trust administration, read this post.