If you are planning your estate, you have probably recently heard that a trust can be a good alternative to a will. You may now be asking, “Why should I have a trust?” The simple answer is that you should not blindly choose a trust or a will. Each of these options has its own benefits, so you need to evaluate which would be better for fulfilling your needs. You can also choose to have both quite easily. Take the time to speak to an estate planning lawyer to learn more.
How a Trust Works
There are three parties involved in the creation of a trust:
- The Benefactor – The benefactor is the individual who creates the trust and puts possessions into the trust.
- The Trustee – The trustee is the individual who receives and temporarily holds the benefactor’s possessions.
- The Beneficiary – The beneficiary is the individual who eventually receives the benefactor’s possessions for good.
If you create a trust, you would be the benefactor. You would enter into an agreement with the trustee to transfer your estate. You would also set the conditions of the trust, and when these conditions are met, the contents of the trust are distributed to the individual beneficiaries you designated. In an irrevocable trust, you would not be able to access your possessions after establishing the trust. In a revocable living trust, however, you would have continued access to your estate in case conditions change or your change your mind.
The Advantage of a Trust
The biggest advantage a trust offers over a will is the ability to put conditions on individual pieces of property. For example, you can stipulate that your nephew will only receive your car if he has completed college, or your niece will receive $5,000 if she is married at the time. A will is unable to make these accommodations.
Additionally, a trust avoids the process of probate and minimizes taxation. Probate is usually quite fast, but in very rare cases can last months or years. If you do not like the idea of the distribution of your estate being delayed, a trust may be better. While trusts are usually not taxed, estate taxes are often smaller than the fee to set up a trust.
An estate planning lawyer will be able to evaluate your situation and provide you with more detailed information about whether a will or a trust would be more beneficial for you. Remember that if you desire, you can have both a will and a trust.