Individuals and families often rely on wills to define the future of an estate. While the will is an important estate planning tool that works well, in some instances, it might not be the right document for your situation, as it can lack certain protections.
A trust, on the other hand, can be set up to include specific protections for you, your family, and your legacy. A will, for example, can define who receives what in terms of your assets, but a trust gives you the power to define how and when those assets are given to whom you wish.
This can be crucial if any of your beneficiaries are minors or you want adult beneficiaries to obtain your assets or money over a longer period of time rather than all at once (which can be complicated if you are not confident your beneficiaries can manage money).
Trusts are also great tools to help you manage your assets in your lifetime, during which you remain the trustee of your trust. As the trustee, you can manage property, assets, money, or anything else you have listed in your trust. During this time, any trust created and funded during your life is a “living” or “revocable” trust.
In the event you are incapacitated — and your trust includes an incapacity clause, which defines who manages your affairs in this instance — the trust will ensure your needs are met. Your estate and finances will be managed for your benefit.
Upon your death, the trust becomes “irrevocable.” At that point your assets are managed and distributed by your designated trustee. They are legally required to follow the instructions laid out in the trust.
The bottom line is that trusts provide an additional layer of comfort. You and your family know a plan is in place for the management of family assets. Trusts also protect family members, such as minors, who may not have the tools or know-how to deal with financial matters. Trusts can also be set up to ensure funds are available to specific beneficiaries for their education or health care. It’s all about setting up your legacy for success.