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June 10, 2024
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Estate Planning with Trusts: Securing Your Wealth and Future

When it comes to estate planning, many people think of wills and trusts as mutually exclusive options. However, they can complement each other to provide a comprehensive plan that suits your needs. Trusts, often perceived as tools for the wealthy or elderly, can benefit estates of all sizes. More people can gain from having a trust than you might think.


The Misconception About Trusts

Contrary to popular belief, estate planning trusts aren't just for the extremely wealthy. Trusts offer several advantages, such as:


  • Avoiding probate court: Beneficiaries receive assets sooner.
  • Privacy: Trusts aren't public records, unlike wills.
  • Protection: Safeguards assets from creditors and lawsuits.
  • Tax Benefits: Reduce or eliminate estate and gift taxes.
  • Control: Set conditions for asset distribution.


Understanding Trusts

A trust is a legal arrangement where the owner (the Settlor) entrusts another party (the Trustee) to manage assets for the benefit of chosen beneficiaries. Trusts come in six broad categories—living, testamentary, funded, unfunded, revocable, and irrevocable—offering flexible options.


Key Parties in a Trust

  1. Settlor: The person who establishes the trust.
  2. Trustee: The individual or corporation managing the trust assets.
  3. Beneficiary: The person who benefits from the trust.


How Does a Trust Work?

The Settlor transfers assets (such as money, property, or shares) to the Trustee, who manages them according to the Settlor's instructions for the benefit of the beneficiaries. Conditions can be set, like releasing funds only for specific purposes or in a staggered manner.


The Purpose of a Trust

Trusts serve several purposes in estate planning:


  • Asset Management: Ensure assets are handled as you wish, both during your lifetime and after.
  • Tax Management: Mitigate tax consequences on your estate.
  • Wealth Protection: Qualify for medical aid in later years while safeguarding your wealth.
  • Financial Care: Set up financial support for young children or dependents with disabilities.


What to Add to a Trust?

Common assets for funding a trust include:


  1. Real Estate: Homes or other properties.
  2. Tangible Property: Jewelry, antiques, collectibles, vehicles, etc.
  3. Retirement Accounts: Naming the trust as beneficiary.
  4. Investment Accounts: Brokerage accounts and non-retirement investments.
  5. Cash Accounts: Savings, checking accounts, money markets, and CDs (handle CD transfers carefully to avoid penalties).
  6. Business Interests.
  7. Stocks and Bonds: Held in certificate form.



For small estates with uncomplicated assets, a will might be the simplest and most cost-effective choice. However, combining a will and a trust can ease the financial and administrative burden, ensuring confidentiality and a smooth transfer of assets. A comprehensive estate plan tailored to your needs will provide peace of mind and security for your loved ones.