Every year, residents of Indiana create trusts as part of their estate planning. A trust can bring you great peace of mind in knowing that you’re preparing for the future. You should know what a trust is and what it can do for you and your loved ones.
What is a trust?
A trust is a legal document that is often included in an estate plan. It can hold your assets so that they can eventually be distributed to the people you wish to inherit them. You can serve as the trustee who oversees the trust or appoint someone close to you to manage it instead. There are many different types of trusts, and they can be either irrevocable or revocable.
How does a trust work?
A trust works by holding a person’s assets to protect them from probate. There must be a grantor, beneficiary and trustee when a trust is established. The grantor is the individual who creates the trust and places their assets inside it. A beneficiary is the person who will eventually receive assets that are in the trust. A trustee is the person who oversees the trust. Sometimes, the grantor can serve as trustee. However, the trustee is often someone else who is a trusted family member, a friend or an attorney.
Should you create a revocable or irrevocable trust?
If you create a trust, you can choose to make it revocable or irrevocable. A revocable trust holds assets and property and allows you to swap them out and change your beneficiaries. You can also be the trustee of a revocable trust and designate someone to succeed you in the event of your death or if you’re incapacitated in the future.
An irrevocable trust cannot be changed. Assets and property you place in this type of trust remain inside it and you can’t change that.
Trusts are an important part of estate planning. You can decide whether it’s worth establishing one and which type is right for you.