Who needs a trust?
Before we consider the need for a trust, it's important to understand exactly what a trust is. A trust is a legal document that is formed between two or more parties where one person, who is called a trustee, holds property on behalf of another, called a beneficiary.
More specifically, a trust is created when property is transferred to a third party while keeping the legal ownership and control by appointing themselves or another individual as the Trustee. In short, a Trust is set up by a Grantor, managed by a Trustee, and benefits the beneficiaries. This can be all different people or just one person that holds all three positions.
In terms of who actually could benefit from a trust:
- individuals who want to ensure their assets will go to the right people
- individuals who want to avoid probate for those they leave behind
- those who want to minimize estate taxes for beneficiaries (irrevocable trust)
- investors who want the ability to keep their assets safe from legal jeopardy
Overall, if you have a net worth of at least $100,000 or have very specific instructions on how and when you want your estate to be distributed among your heirs after you die, then a trust could be for you.
There are several types of trusts, which can be used to meet specific needs. An experienced estate planning attorney can help you identify the best trust for you, your family, and your assets. Learn more about trusts here.