Estate Planning - Establishing a Trust

Trust are legal arrangements in which a grantor transfers assets to a trustee, who holds and manages them for the benefit of the named beneficiary. The grantor is the person who establishes the trust. The trustee is the person to whom the property is entrusted for safekeeping. The beneficiary is the person receiving the benefit of the assets. With some trusts, such as a living trust, you may be wearing all three of these hats at the same time.

Deciding to transfer money in trust is often the best decision for the circumstances---for example, if you should have a child who is severely disabled. However, you need to know that some recipients of trusts will feel deeply hurt. It is better, in my opinion, to communicate with them directly about this decision---ideally, before putting it into effect. Then you can explain what motivated your choice.

Here are some of the reasons for establishing a trust:

• Avoiding probate

• Providing privacy

• Protecting assets from creditors

• Managing money for minor children

• Managing assets if you are unable or unwilling

• Providing for a child with special needs

• Utilizing your unified credit and marital deduction

Trust are very complicated estate-planning tools. A word to the wise: Don't try this at home. Get help but be sure your help is competent. Scam artists are selling living trusts door to door.

Trust can be set up while you are alive or be created by your will upon your death. These are referred to as testamentary trusts. I will briefly outline some of the more common trusts here. The more complicated your life and finances, the more likely you will be a candidate for using trusts in  your estate planning.