The complexities of estate planning often cause people to procrastinate preparation for the future altogether. Another cause of procrastination lies in misconceptions about how wealthy a person needs to be to plan or how old a person needs to be to plan. Whether you are younger or older, married or single, a parent or without children, you should consider developing an estate plan. Estate planning is the process by which an individual or family arranges the transfer of assets in anticipation of death. An estate plan aims to preserve the maximum amount of wealth possible for the intended beneficiaries and flexibility for the individual prior to death.
Proper estate planning will avoid the chaos and wasted assets of an unplanned estate, enhance your sense of security, and provide a dimension or personal well-being to your loved ones. As such, a trust is typically put in place in order to take some essential steps in planning for the future. A trust agreement comes in the form of a document that outlines particular rules to be adhered to as they relate to property held in trust for a person’s beneficiaries. This legal agreement is made between the trustor (sometimes called the grantor or settlor) and the trustee.
The main players in a trust are as follows:
- Trustor: the person who create the trust agreement
- Trustee: the entity or person who is tasked with managing the trustor’s property
- Beneficiary: the person(s) who are intended to receive the benefits from the trust
There are two main types of trusts:
- Revocable Trust (also known as a Living Trust)
- Irrevocable Trust
Irrevocable trusts generally cannot be changed. Revocable trusts, however, allow the trustor to place their assets throughout their lifetime to be transferred upon death to the beneficiaries. Additionally, a Charitable Remainder Trust is created to allocate assets to a specified charity at the completion of the trust. Trusts, unlike wills, have the benefit of avoiding probate, a lengthy and costly legal process that oversees the transfer of assets. Contact our office today to find out which avenues of estate planning are best for you.