The Basics of Estate Planning – Part III

In Part II, we discussed Wills and the advantages and disadvantages of having a Will. This issue will focus on the second of four estate planning tools – a Trust, and the advantages and disadvantages of having a Trust as part of your estate plan.

What is a Trust?

A Trust, generally, is a legal entity that can hold title to property. There are three parties to a Trust agreement: the Trustmaker who creates the Trust, the Beneficiary who receives the benefit of the property held in the Trust, and the Trustee who manages the Trust. The property that is transferred to and held by the Trust becomes the Trust principal. If you create a Trust within your Will, it is called a Testamentary Trust. If you create a Trust while you are alive, it is called an inter vivos or Living Trust.

While you are alive, you usually will receive all the income of the Trust and as much of the principal as you request. Upon your death, the Trust assets are distributed to your Beneficiaries in accordance with your directions contained in the Trust agreement, or it can continue for specified purposes for a period of time.

The Advantages and Disadvantages of a Trust

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The Basics of Estate Planning – Part I

Did you know that approximately 60% of American adults do not have a written estate plan?  Estate planning is extremely important, but most adults do not fully understand what estate planning is and how it works.  Adults also do not fully understand that without an estate plan, a judge, who does not know you, your family, or your wishes, will determine who gets your assets and who will care for your minor children.

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Why Every Adult Needs an Estate Plan

An estate plan allows you to get your affairs in order in the event you become incapacitated or die.  A Will, which is the most basic estate planning tool, contains a written set of instructions to your loved ones as to how you want your estate to be distributed after your death. So, what happens … Read more