According to the 2023 Wills and Estate Planning Survey by Caring.com, only 34 percent of Americans have an estate plan.
The primary reasons respondents gave for not participating in estate planning are:
- Believing they need more assets
- Not knowing how to make an estate plan
An estate plan is a comprehensive set of legal documents and strategies that organizes assets for a person’s death or disability. Trusts are legal arrangements used in estate planning, alongside wills and powers of attorney.
Trusts as an Estate Planning Arrangement
A trust is an arrangement in which someone (a “settlor”, also called a “grantor”) transfers money or other assets to another (a “trustee”) who manages the assets and distributes the trust fund under terms and conditions set forth in a written trust instrument for the benefit of a specified person or persons (a “beneficiary”).
Not All Trusts are the Same
There are all kinds of trusts that exist for a variety of reasons. Some are “revocable”, that is, cancellable by the settlor. Others are “irrevocable”. Some become active immediately when created (inter vivos, that is, “living trusts”). Others are included as part of one’s will and do not come into existence until after death of the settlor (“testamentary trusts”).
Reasons for Having a Trust
Many different reasons exist for including a trust in an estate plan. Some are created to protect against the risk of mismanagement of assets; or of improvident spending; or to avoid or minimize taxes; many are designed to provide a combination of different benefits and protections. The terms and conditions for management and distribution of a trust fund vary according to the specific goals behind the trust. But all contain the roles noted here – settlor, trustee, and beneficiary.
Goals Achieved by Having a Trust
Trusts generally fulfill one or more of the following purposes:
- Tax Avoidance
- Management Assistance
- Creditor Protection
- Public Benefits Eligibility
- Probate Avoidance
Consult With Your Attorney
While not everyone needs to create a trust as part of a solid estate plan, trusts can benefit many people in transferring wealth. Call the lawyers at Vasiliadis Pappas Associates to learn If a trust should be included as part of your estate plan.