One of the central duties of an estate plan is providing instructions about who is going to get your assets when you die. Some people handle this through their will, but that’s not the only option that you have.
When you use your will to distribute assets, your beneficiaries have to go through the probate process. This can take considerably longer than using a trust, and it will likely be more expensive.
How does a trust work?
When you create a trust, you have to fund it with the assets that are governed by it. The contents of the trust are managed by a trustee. Once you pass away, the trustee distributes those assets in accordance with your wishes.
As you’re going through the different types of trusts you can establish, you’ll notice that they’re all categorized as either revocable or irrevocable. The primary difference between these is that you can change the revocable trust and act as the trustee for it while you’re alive, but you can’t change the irrevocable trust or act as the trustee for it.
An irrevocable trust can only be changed if you have the permission of the court or of all the beneficiaries. Because you don’t control the assets and can’t change the terms of the trust, your creditors can’t claim the contents of the trust to satisfy debts or judgments.
Trusts are only one part of creating a comprehensive estate plan. Taking the time to understand the options that you have in order to make your wishes known and legally enforceable is critical. This may be easier if you have someone on your side who understands your circumstances and the current estate planning laws.