An important part of estate planning is deciding exactly what to include in your estate and how to go about leaving your assets to your heirs. One option is a trust, which Charles Schwab explains is an agreement about asset distribution that can usually prevent the need for probate. There are many reasons why you may choose to create a trust.
You could use a trust to set up finances for an heir. For example, if you have a child who is not responsible enough to receive his or her full inheritance, you may want to develop a trust that distributes the inheritance over time and pays in full when your heir reaches a certain age.
A trust can also be helpful if you want to minimize estate taxes. If you know your heirs will be hit with large taxation, a trust can help to avoid that.
It is also helpful if you need to provide for a special needs child after your death. The trust can provide details and money to care for the child and ensure he or she is well taken care of after you die.
The biggest reason you might consider a trust is that it allows you to maintain a lot of control even after your death. You can make very specific directions with a trust that you cannot with other estate options. A trust gives you the chance to ensure your estate is handled exactly how you want it to be. The control is greater than what you get with even a will. This information is for education and is not legal advice.