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By John R. Merlino Jr. Esq.
Founding Attorney

Oftentimes, people most strongly associated estate plans with the creation of a will. While a will often plays a central role in an estate plan, there are a variety of other legal tools that can play prominent roles. Trusts, for instance, can be very useful in an estate plan. With a trust, you transfer ownership of assets into a trust in order to fund it. This becomes the corpus of the trust, also referred to as the “trust principal.” A trustee is appointed to manage trust assets for the benefit of the trust beneficiaries. Distributions from the trust are made pursuant to the terms set forth in the trust document.

A trust can be both explicit and detailed as to how you want trust assets to be distributed and when you want such assets to be distributed. This gives trusts the ability to serve a variety of different purposes. Here, we will discuss the different ways trusts can prove useful in an estate plan.

How Trusts Can Be Useful in an Estate Plan

While there is the common misconception that trusts are only for wealthy individuals with substantially sized estates, people of varying income levels can find benefits in employing a trust as part of their estate plan. A trust can minimize gift taxes and estate taxes. Additionally, a trust, much like a will, can specify a person to act as guardian of your minor children upon your death.

One of the more common reasons to seek the establishment of a trust is, in fact, to avoid the often lengthy and expensive probate process. You see, while a will goes through probate, a trust falls outside of probate allowing your heirs and beneficiaries to avoid this notoriously frustrating process. With a trust, the trust transfers ownership of trust assets directly to your named beneficiaries according to the terms of the trust. This direct transfer renders probate unnecessary. Furthermore, assets held in the trust are technically owned by the trust itself, not by a person, that is why trust assets transfer outside the probate proceedings of a decedent’s estate. By avoiding probate, your heirs are able to have faster access to the assets held in trust. When assets are transferred via a will, heirs will need to wait it out in probate before receiving an inheritance.

Trusts also offer a level of privacy that you cannot get with a will. A will is filed with the state and probate proceedings become matters of public record. Trusts remain private as they fall outside of probate. This privacy can be extremely valuable as many do not want such personal and financial matters to enter the public record upon their death.

Other ways that trusts can be useful will vary greatly depending on the type of trust established. A special needs trust, for instance, can allow a person to provide for a loved one with special needs without jeopardizing the continued receipt of vital government benefits. A spendthrift trust, on the other hand, can condition and pace trust distributions in a way that protects trust funds from being rapidly spent away by a beneficiary and can also provide significant protection from creditors of trust beneficiaries.

Estate Planning Attorneys

Interested in learning more? Discuss your options with the knowledgeable estate planning attorneys at Merlino & Gonzalez. We have answers for you. Contact us today.

About the Author
John is a fierce advocate and the office guru for problem-solving and brainstorming. He guides clients through every stage of a real estate transaction from offer to contract, navigating through nerve-shattering home inspection and title clearance concerns, maintaining constant contact with lenders, conducting the actual closing, and continuing to advise clients with regard to any post-closing concerns.  John brings a practical and fair-minded approach to the process which has earned him the respect of his clients and peers.