What are trusts and what benefits do they offer?

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A Quick Overview of Trusts

A trust is a plan to take care of the people you love when you’re no longer around or lack capacity to assist them. Traditionally, a trust is used for minimizing estate taxes and can offer other benefits as part of a well-crafted estate plan. 

In more specific terms, a trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries.

Creating a trust involves a written document that combines your assets for your benefit during your lifetime and provides for the transfer of those assets to a specified individual or individuals upon your death. For legal purposes, these individuals are referred to as secondary beneficiaries. 

One of the most attractive benefits of a trust is that they do not require probate. There are many circumstances in which a will must be administered through the probate process, which can be costly, time-consuming, and extremely public in nature. As a result, the administration of a trust following a decedent’s death typically allows a faster distribution of the assets. 

A trust can also provide a method for increasing your financial stability and providing a better outcome for the secondary beneficiaries. A trust’s assets can remain in investment accounts during the founding beneficiary’s lifetime, allowing them to increase in value. Additionally, a trust provides the founding beneficiary with significantly more privacy than a will. A trust can be designated as confidential and remain unavailable to prying eyes.