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Trusts as estate planning tools

Many California residents consider trusts to be an essential part of their estate plans. Trusts allow people to set the terms of how money should be spent by the beneficiaries, as well as appoint someone to oversee the assets, which can be an attractive option when children are the beneficiaries. In many cases, trusts are the only way to achieve what people envision for inheritances they leave behind.

If people want their beneficiaries to use their inheritance for something specific, such as college tuition or a down payment on a home, they can leave a request in their will, but beneficiaries are under no obligation to honor a request. With a trust, how the money can be used can be dictated and will be enforced by the trustee. A trustee manages funds, makes payments, handles investments and basically ensures assets are not used counter to the wishes of the person who established the trust.

One consideration with a trust is finding a responsible person who is willing to manage the funds. Being a trustee is a time-consuming and possibly stressful job. The person must be able to stand firm on when money is released. A friend or family member may seem like a smart, inexpensive option compared to a professional trustee, but it’s a lot to ask of someone. A friend may be entitled to compensation for being the trustee anyway, so this might not be a money-saving choice.

Establishing a trust is an attractive option for many people, but trusts can be complicated, particularly if the desired purpose is specific, the portfolio varied or there is a minor involved. An attorney can help to ensure that a trust is set up correctly and with the intended terms.

Source: Insurance News Net, “Why High-Net-Worth Clients Need Trusts In Estate Plans“, Jamie Golombek, June 11, 2014


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