Trusts are increasingly common in lieu of wills as the best means for estate settlement. Given trusts’ long history and the numerous varieties, it’s not surprising that most people don’t understand what a trust is.
A trust is simply a contract designed to protect your assets by giving trust administration power to a third party. Trust companies bring extensive experience to bear when managing trusts, as well as a contractual obligation, to put the best interests of the trust beneficiaries first. This obligation involves managing the trust to protect and grow its assets and to use those assets solely for the beneficiaries’ benefit. In the right hands, you can consider a trust to be the best individual retirement account and method of planning for the future.
Why not just a will?
A will is an important estate planning tool, which is also typically drafted in connection with a trust. The drawback of planning with only a will is that a will’s power only takes effect upon your death. In other words, a will cannot help you plan ahead for incapacity. So, if at some point you become unable to make your own financial decisions, your will cannot help you. A trust, on the other hand, does double duty; whoever you select to serve as your back-up trustee can step into your shoes and carry out your wishes in the event of your death or incapacity.
And, assets in a trust may also be able to avoid the probate process, saving time, court fees, and potentially reducing estate taxes as well.
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Trust services provided by Members Trust Company, a federal thrift regulated by the Office of the Comptroller of the Currency. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. Information in this website is for general illustration and informational purposes only and is not intended to provide specific legal or tax advice. For specific legal or tax advice, please consult with your attorney and/or accountant.