Have you ever been at a social gathering and felt a little insecure after overhearing someone boast about their fancy trust? Me neither. But that doesn’t mean you may not have some questions about what exactly a trust is and how it could be useful to you. A trust is a legal arrangement where someone (called the Grantor) gives authority to someone else (called the trustee) to manage assets for one or more beneficiaries. The terms of the trust are written in a trust agreement. There are many types of trusts and reasons why someone might want to establish one.
One common type of trust is a revocable trust, which can be used as an alternative to a Last Will and Testament. If the trust is properly funded, the trustee can start managing the assets immediately upon the Grantor’s death, avoiding the delay and costs of probate. A revocable trust may also be helpful if the Grantor has property in multiple states or if the Grantor becomes unable to manage their affairs due to illness
Other trust arrangements include an irrevocable trust, which protects assets, and a supplemental needs trust, which provides for a disabled person while preserving government benefits.
I hope this brief explanation has somewhat prepared you for that one day (which may never come) when someone is bragging to you about their trust. If you’re interested in discussing whether a trust may be right for you, you should contact an attorney with experience in estate planning.