Most people in Connecticut don’t know there are other estate planning options besides wills to control assets. While wills are important documents, trusts offer several benefits to everyone involved.
How trusts work
A trust is a document the grantor may use to hold assets for the beneficiary upon their death. If the trust is revocable, the grantor may add, sell, or remove assets as the need arises. Some other types of trusts include:
- Spendthrift trusts, which distribute inheritance in chunks
- Charitable trusts to benefit nonprofit organizations and beneficiaries
- Dynasty trusts, which distribute wealth through generations without tax consequences
If the trust is irrevocable, it means the grantor can not alter the contents after signing the paperwork. The grantor can assign a trustee to manage the assets or act as one, depending on the trust type.
Benefits of trusts
Trusts as an estate planning tool that helps the beneficiary avoid the lengthy and expensive probate process that can take weeks. Probate is a court procedure that settles the decedent’s, or deceased person’s, will, and it can decrease inheritance. A trust offers privacy and doesn’t become a public record, unlike a will, which can be viewed by the public.
An irrevocable trust commonly helps the grantor save money on capital gains, such as for stocks. Some irrevocable trusts may help a grantor protect assets from divorce or if they are in professions susceptible to lawsuits.
The grantor can assign a trustee to manage the assets or act as one depending on the trust type. A living trust helps the grantor avoid conservatorship, which assigns a representative to manage the trust if they get incapacitated. Trusts often can not be challenged in court as easily as wills and require proof if a party thinks they are invalid.
There are many types of trusts for every situation and regardless of income. However, grantors should seek advice, even for a simple trust, since laws are complex.