What is a trust?

What is a trust?

“What is a trust?”, is one of the most commonly asked and searched for estate planning questions. A trust is a powerful legal arrangement designed to protect and manage assets for the benefit of individuals or families. A trust is operated under the guidance of a trustee, who ensures that the assets are used according to the wishes of the person who established the trust (the settlor). Trusts offer numerous advantages, primarily centered around their ability to provide long-term financial security, flexibility, and certainty. 

One benefit of a trust is that it can ensure assets are safeguarded and managed effectively, even after a person passes away. This can be important when planning for minors, individuals with special needs, or individuals with limited financial acumen or poor money habits. Trusts allow individuals to specify how to hold and invest assets as well as how and when assets should be distributed to beneficiaries. They can be set up to ensure that minors or individuals with special needs are provided for without jeopardizing their eligibility for government benefits. Moreover, trusts can help minimize estate taxes and avoid the lengthy and often public probate process, thereby maintaining privacy and efficiency in asset distribution.

Beyond estate planning, trusts can also serve broader financial purposes. They can be used to protect assets from creditors, manage wealth across generations, or even support charitable causes. Trusts can be tailored to meet specific needs and goals, whether it’s preserving wealth, supporting education, or ensuring ongoing care for loved ones. Ultimately, trusts are not just beneficial but essential tools for many individuals looking to secure their financial future and leave a lasting legacy that aligns with their values and intentions.