A Trust: Who Needs One

Reasons for Having a Trust

A trust is a property arrangement whereby a trustee (such as a bank trust department or a person) takes care of, holds title to, and, in most cases, manages property for the benefit of someone else. Trusts are not for everyone but can fit the needs of certain people, including those whose estates approach or exceed the federal tax limit and those with young children or disabled family members who are unable to manage their own affairs. Various types of trusts are designed for different situations and circumstances.

It is important to understand terms related to trusts:

• Grantor, settlor, or trustor is the person who creates the trust
• Trustee is the person or entity named to carry out the instructions contained in the trust document; he/she also holds legal title to and manages the trust property
• Beneficiary is the person who benefits from the trust
• Revocable trusts allow you or someone you name to make changes in the document
• Irrevocable trusts cannot be made void, rescinded, cancelled, or reversed by anyone

Your personal circumstances will determine whether it is beneficial to establish a trust. Among the reasons commonly cited for setting up a trust are that it can:

• Provide payment for or reduce the amount of estate taxes
• Avoid probate and transfer your assets to your beneficiaries immediately
• Provide income for beneficiaries and a surviving spouse
• Free you from managing your assets while allowing you to receive a regular income from the trust
• Have your property serve a desired purpose after your death

A will is also needed to transfer any assets that have not been transferred before death and to nominate a personal guardian for children.