Trusts are powerful estate planning tools that Californians can utilize to help bring their vision of the future into reality. In order to successfully do so, though, they must understand how trusts work and how to utilize them to their advantage.
This is especially true considering the fact that there are a variety of trusts available to those planning their estates, each with their own benefits and drawbacks. This week, we’re going to take a step back and take a look at the life of a trust in hopes that Californians will develop a better basic understanding of these legal entities.
A trust is created by an individual called a “grantor,” and assets are placed into it. These assets may include cash, bank accounts, real estate, and personal property. The trust is managed by an individual called a “trustee.” This individual manages the trust assets for the benefit of another named individual, called a beneficiary. The grantor can place conditions on the release of trust assets, such as when the beneficiary turns 18, graduates from college, or even completes a substance abuse treatment program. These conditions allow a grantor to retain some sort of control over their assets after they are gone, thereby ensuring that they are used in an appropriate fashion.
A trust can continue for a significant period of time before they end. There are two primary ways that a trust can end. The first way is that the trust assets are depleted. So, if all the cash in a trust has been paid out to a beneficiary, then the trust ends. The other way a trust can end is when the conditions placed on the trust are met. For example, a trust may call for the payout of a certain amount of cash from trust investments until the beneficiary gets married, at which time all of the assets in the trust will be released.
There are a wide variety of estate planning options at Californians’ disposal. Choosing the right ones is critical to establishing a future for one’s estate that adequately provides for loved ones. This is an achievable task, though, especially for those who choose to work closely with an estate planning legal professional.