Why a Trust Is an Essential Part of Your Estate Plan
Many individuals make a last will and testament as part of an estate plan, assuming it’s sufficient to just name beneficiaries. It is in a lot of situations that include someone dividing their assets between a spouse and children, but there are often more complex situations. If you have a long list of people you want to benefit from your assets after your death, you may want to consider a trust.
What Is a Trust?
When you and a trustee make an agreement, it is called a trust. There are a lot of purposes a trust may be made, but in many cases, it is to commit the trustee to manage and protect your assets after you have passed on. The trustee named in the trust is required to administer your assets as you would like them administered, as well as to distribute the income and principal in a way that benefits those you’ve named in your trust as beneficiaries.
Who Should Be a Trustee?
You should only name a trustee you truly trust. The individual will be a fiduciary, which means he or she will be required to act reasonably in administering your trust and investing your assets. He or she will be required to avoid conflicts of interest, and should strive to avoid breaching any duties you request. As you can see, this is a big responsibility. Choose someone with a history of loyalty to you and your relationship, as well as someone with a history of responsibility. Someone with sound financial abilities would benefit the situation as well.
How Do I Structure the Trust?
There are many ways to structure a trust so your goals are met and the trustee is able to easily balance the demands you set forth in the trust. The first thing you’ll need to do is decide how to fund the trust. Many individuals decide on a living trust, which typically doesn’t get funded until you have died. A living trust will include details for how you want the trustee to divide your estate among certain individuals. If you have children who are minors at the time of your death, they’ll typically be given funds at certain times in their lives, such as when they go to college.
Learning More About Trusts
A trust can be a beneficial part of your estate plan. To learn more about why they’re important, or to get started with your estate plan, contact an estate planning lawyer, like the Yee Law Group for a consultation.