The word trust can scare some people off, unfortunately. A trust is not a complicated issue at all, and it presents those planning their estates with a great alternative to a last will and testament. For an explanation of what a revocable trust is and why every estate should include one, read on.
Understanding a Trust
Consider a trust to be just like a bucket filled with estate property. That might mean your trust bucket contains real estate, cash, jewelry, and more. Anything you might include in a will can also be included in a trust. When you add items to a trust, it's known as funding the trust. Once the owner dies, the trust is handed over to a trustee who was chosen by the owner for that purpose. The trustee makes sure that the property contained in the trust is handled according to the directions of the owner.
How is a Trust Different from a Will?
A trust contains property and has an administrator just as a will does. However, a revocable trust does more for the owner than a will could because of its flexibility. With a will, you should not place conditions on a beneficiary. However, a trust will allow you to be far more detailed in your instructions for the beneficiary and that is because the trustee is there to ensure the funds are paid only under the circumstances. For example, you can set aside funds for a minor using a trust. The funds can be made payable on a schedule once the minor is of age. The funds can even be designated to only be used for educational purposes.
Another way that a trust is different from a will involves probate. Any property held in a trust is exempt from probate, even if that item is specifically mentioned in the will. That means the beneficiary does not have to wait until probate is over to obtain their inheritance.
A trust is also private, unlike a will which is public information. No one will know the full extent of the trust except the owner and the trustee.
Revocable and Irrevocable
These two types of trusts are self-explanatory. A revocable trust can easily be changed by the owner at any time prior to their death. However, an irrevocable trust cannot be changed. The only thing that may be done if a problem exists is to abolish it and begin a new trust. That is why revocable trusts are easier to deal with than irrevocable trusts.
Speak to an estate trusts lawyer about your estate needs and find out more about revocable trusts.