Trusts are time-tested tools for estate planning. As legal devices, they have deep roots in the common law. Yet trusts remain timely and relevant today, in the Internet age, as a way for people to protect assets and accomplish wealth transfers while allowing the trust administrator to maintain a degree of oversight and control.
What Makes Trusts Unique
The basic premise of a trust - what makes it such a valuable vehicle for transferring property - is the separation of two distinct features of property ownership. One aspect is the legal obligation of the trustee to manage property responsibly for those whom the trust benefits (the beneficiary or beneficiaries). This is called a fiduciary relationship.
The other aspect is the beneficial ownership in the trust. A trust allows assets to be managed for the benefit of a beneficiary without actually being distributed to him or her.
In fact, trusts offer so much flexibility that the beneficiary does not even have to be a human person; in the case of pet trusts, it could be a dog, cat or other animal.
Avoiding Probate Isn't the Only Advantage
Many people have heard of trusts as a possible way to avoid the time and expense of lengthy and cumbersome proceedings involved with probate of a will. And indeed, steering clear of probate remains one important reason to consider creating a trust. So does minimizing or avoiding estate or gift taxes, as well as protecting assets from creditors.
But there are many different types of trusts, and they can be used in many different ways, depending on your estate planning goals. Some of the basic forms include:
•· Revocable trusts
•· Irrevocable trusts
•· Realty trusts
•· Pet trusts
•· Charitable trusts
•· Special needs trusts
Though each is different, all of these trusts allow for considerable flexibility and discretion in the transfer of wealth.
Talk It Over With an Attorney
To be sure, the advantages of trusts do come with certain formal requirements. The ongoing management and taxation of the trust must be considered at the outset.
For these and many other reasons, it makes sense to discuss trusts with an experienced Massachusetts estate planning lawyer at our firm.
