Key aspects of a trust
You desire to protect your loved ones, when possible. A proper estate plan can aid in your efforts even after you are gone.
One possible aspect of an estate plan is a trust. Before selecting one for your plan, consider a few important aspects.
How it works
A trust is similar to a will in that it helps to designate and protect certain assets for your beneficiaries. However, unlike a will, most trusts do not have to go through the probate process, so the trust beneficiary receives the full benefit of the trust. This is due to the fact that once an asset enters a trust, it is no longer part of the estate. By the same token, if the trust is irrevocable, or irreversible, the trust creator cannot remove assets that go into it.
Different beneficiaries
Three major trust beneficiary categories exist:
- Primary
- Contingent
- Remainder
As the name indicates, primary beneficiaries are the first parties to receive assets of the trust. If the primary beneficiary is unable to receive the benefits for whatever reason, the contingent beneficiaries then receive the assets, and, finally, the remainder beneficiaries. Understanding this distribution designation can aid in your decision.
Being knowledgeable
It is important to understand how the trust works, as well as how it does not work. In other words, understanding the laws and regulations is essential to keeping the trust intact and for you to get the most out of your trust. Along with any other aspect of the estate plan, the different types of trusts have different effects on your estate. Therefore, it is critical that you know what the trust can and cannot do for your estate, to ensure it aligns with your desires.
A trust can be quite a beneficial tool when you use it correctly. Consider how a trust could fit into your estate plan.