While a will may serve the estate planning needs for most people, it may not be sufficient for everyone. Some individuals want or need more control over the distribution of their assets than a will can provide. In those situations, a trust can be a helpful tool. Some people may think that trusts only exist for the wealthy. However, a trust can be useful regardless of wealth. Anyone who wishes to specifically guide or control their assets may benefit from having a trust.
A trust can be used for a wide variety of estate planning purposes. A common reason for having a trust is to control the distribution of assets to a beneficiary who is either a minor or is otherwise unable to manage their inheritance. Similarly, a trust can be used to manage assets should the trust's creator become physically unable to manage them him or herself. In addition, a trust can be used to bypass probate and get assets into the hands of beneficiaries more quickly.
There are several different kinds of trusts. The biggest distinction is whether it is a living or testamentary trust. Living trusts are set up while the grantor is still alive while testamentary trusts are set up after the grantor's death. Living trusts can also be revocable or irrevocable. With a revocable trust, the grantor can make changes and even move assets in and out of the trust. The grantor has no such ability with an irrevocable trust.
Trusts can sometimes be complex, depending on the goals of the grantor. In addition, the grantor may need to choose another party to act as trustee and manage the trust's assets. An experienced estate planning attorney could help an individual determine which type of trust is right and could help the individual implement the trust in the correct way.
Source: USA.gov, "Understanding Trusts", December 17, 2014