What is a Trust?
A trust is a legal setup where one person (the settlor) gives property to another (the trustee) to manage for the benefit of others (the beneficiaries). The trustee legally owns the property and must follow the rules in the trust agreement. Trusts are often used to plan estates, protect assets, and pass wealth to future generations. They can be made while the settlor is alive or created by a will after death. The main point is that the trustee owns the assets legally, but the beneficiaries get the benefits.
Creating a trust in your will is a strategic way to manage how your assets are distributed after your death. A trust allows you to specify conditions under which your beneficiaries receive their inheritance, providing greater control and protection compared to a straightforward bequest.
Benefits of Including a Trust
Control over distribution: You can stipulate when and how beneficiaries receive their inheritance, such as reaching a certain age or milestone.
Protection for beneficiaries: Trusts can protect assets from creditors, divorce settlements, or poor financial decisions by beneficiaries.
Tax efficiency: Certain trusts may provide opportunities for tax planning, reducing the tax liabilities on your estate.
Support for minors or dependents: Trusts ensure that children or other dependents receive financial support in a structured manner.
Steps to Make a Trust in Your Will
Determine your objectives: Consider why you want the trust—whether to protect assets, support minors, or manage distributions.
Choose trustees: Appoint trustworthy individuals or professionals to administer the trust after your death.
Specify terms clearly: Define the conditions for distribution, duration of the trust, and powers of the trustees.
Review your will regularly: Life circumstances change, so periodic reviews help keep the trust aligned with your wishes.