The are several benefits of a a trust. Here are some of them:
Trust assets normally avoid the probate process and this allows the trustor’s beneficiaries to access the assets faster than if they had to go through the transfer process under a will.
Irrevocable trusts are not considered part of the trustor’s taxable estate creating a potential estate tax savings.
Privacy is another benefit. Probate matters are public record where the trust activities can remain private.
You may save on probate fees and time by using a trust instead of going through the probate process. (Probate is the essentially the process of the courts evaluating your will and distributing the assets under the will’s directions or current law.)
Trusts can also protect your legacy by protecting assets from creditors and beneficiaries that may not have financial or money management skills.
Using a trust also allows you to retain control of your wealth before and after your passing. You get to specify the terms of the trust including when and to whom distributions may be made. This allows you to deal with complex situations such as children from multiple marriages, stepchildren, current and past spouses, etc. You can use a revocable trust during your lifetime, so you have access to the trust assets if you need them.
Trusts are legal entities created to pass benefits from one person to another with the help of a third party or person. Trusts require three roles – the first party or asset owner called a trustor or settlor will transfer the asset or property to the second party called the trustee and provide directions in a trust agreement to benefit the third party called the beneficiary. Essentially, the trustor is trusting the trustee to carry out the trustor’s desires in benefitting the beneficiary.
As the one selected to act as the Trustee, someone has put a lot of trust in you to help them fulfill their wishes.
The trustor gives up legal ownership of the assets held in trust and the trustee becomes the legal owner of those assets, holding those assets on behalf of a beneficiary or beneficiaries. The beneficiary is the equitable owner of the trust property.
The trust document serves as the instructions for the trustee on how to manage and control those assets placed in trust. It should describe what the trustee is supposed to give the beneficiary and when.