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FAQs About Trusts
Yes
What Is a Trust?
A trust is a legal arrangement where one party (the trustee) holds and manages assets on behalf of another party (the beneficiary) according to the terms set by the grantor (the person who creates the trust).
Why it matters: Trusts can help manage wealth, avoid probate, and provide financial security for loved ones.
Why Should I Consider a Trust?
Common reasons include:
- Avoiding Probate: Assets in a trust typically bypass the lengthy and costly probate process.
- Tax Benefits: Certain trusts can reduce estate taxes.
- Asset Protection: Protects assets from creditors or lawsuits.
- Control: Allows you to specify how and when assets are distributed.
What Are the Main Types of Trusts?
- Revocable Trusts: Can be changed or canceled during your lifetime.
- Irrevocable Trusts: Cannot be altered once established; often used for tax benefits.
- Living Trusts: Created while you’re alive to manage assets during life and after death.
- Testamentary Trusts: Established through a will and activated after death.
Do I Still Need a Will If I Have a Trust?
Yes. A will covers assets not included in your trust and can name guardians for minor children. A trust and a will often work together in an estate plan.
How Much Does It Cost to Set Up a Trust?
Costs vary based on complexity and legal fees. Simple trusts may cost a few hundred dollars, while complex trusts can cost thousands.
Who Should Be My Trustee?
Choose someone trustworthy and financially responsible. Options include:
- A family member or friend.
- A professional trustee (such as a credit union or trust company).
- A combination of both.
Can I Change My Trust Later?
If it’s revocable, yes—you can modify or dissolve it. If it’s irrevocable, changes are generally not allowed.
Are Trusts Only for the Wealthy?
No. Trusts can benefit anyone who wants to:
- Avoid probate.
- Protect assets for children or dependents.
- Plan for incapacity or long-term care.
Action Steps
- Review your financial and family needs.
- Consult with a financial advisor or estate planning attorney.
- Explore trust services offered by your financial institution.
Trusts are a versatile tool for protecting your assets and ensuring your wishes are honored. By understanding the basics, you can make informed decisions about whether a trust is right for you.
Speak with our financial experts today to learn how a trust can fit into your estate plan.
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