Why are Trusts Useful?
Trusts are established for widely different reasons, but all trusts are a variation on a basic arrangement in which a person (a grantor) transfers property to a trusted person (a trustee) to be managed and distributed in accordance with the grantor’s instructions. By transferring property to a trustee, a grantor can separate the use and enjoyment of property from the responsibility for managing it.
One of the key features of trusts is their unique ability to separate present enjoyment of assets from future enjoyment. A trust can provide for one or more persons to receive income or enjoyment from property for life or for some other defined period of time, and then shift the income, enjoyment or ownership in a subsequent period, often long after the death of the grantor who created the trust.
Trusts are powerful planning tools that may accomplish any of a number of important planning objectives, including transfer of property, wealth management, protection of minor children, controlling funds until beneficiaries are able to handle them, planning for disability or death, multi-generational planning, charitable planning, tax planning and avoidance of probate. The decision to create a trust starts with a proper assessment of goals, and circumstances to determine whether a trust will be helpful. Because trusts can help in many ways, they are not only for wealthy individuals.