Trust basics
Trusts
aren’t for everyone: There can be substantial set-up and
administration costs, and many people can create perfectly suitable
estate
plans using just
wills,
joint ownership arrangements, and
beneficiary
designations. That said, there are situations in which a trust might
help you transfer your wealth more easily, with lower taxes, or with
more control over what happens to the
assets
you leave behind.
How a trust works
A trust is a legal entity that involves three parties: the grantor,
trustee,
and
beneficiary.
As the grantor, you arrange to have a lawyer craft the trust document,
and you provide the assets. You then choose a trustee — generally a
relative, friend, the trust department of a bank, or a lawyer — to
manage the assets in the interests of the beneficiaries you name. In
some cases, you can serve as trustee yourself.
Trusts
are extremely flexible, but they have to be drawn up carefully to
ensure that you’ll accomplish your goals. That’s particularly true if
you’re using this approach to minimize estate taxes. So it’s absolutely
essential that you consult with an experienced estate planning
attorney.
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