Trust funds can be an effective tool for estate planning. They can ensure that your assets end up with the recipients of your choosing. As the grantor, you can designate who your beneficiaries are and appoint a trustee to manage your assets. Not only do trust funds make sure your beneficiaries are financially secured after your passing, but they also offer protection from certain processes and entities. This can include preventing creditors from taking assets away from you or your beneficiaries, reducing or eliminating any estate or inheritance taxes, and avoiding the probate process. If you are interested in establishing a trust fund, reach out to the PA trust attorneys at Friedman Schuman to discuss your estate planning needs.
How do I fund a trust?
First and foremost, you need to decide what type of trust you want. This is crucial in determining what kind of assets are going into your trust, how the trust will be managed, and the specifications of how you wish for your beneficiaries to receive those assets. If you do not set up the correct trust, the goals you set out for it may not be achieved.
After you decide on what type of trust you wish to pursue, then you can begin transferring your assets into it. This can be done while you are alive, but it can also be done after your death. That said, it is preferential to fund your trust while you are alive to make sure that everything is managed correctly and that your assets are distributed according to your wishes.
What is the difference between a living trust and a will?
The main difference between a living trust and a will is how they are managed. A will distributes your assets based upon your instructions after your death. A living trust can be far more comprehensive regarding the handling of your assets. Unlike wills, they can be distributed while you are still alive based on your wishes, while also making sure that your assets are better protected after your passing.
While they are both important estate planning options, a living trust can offer more options regarding the managing of your assets compared to a will. However, unlike living trusts, wills offer the ability to designate power of attorney, name guardians for minors, and specify any end-of-life healthcare choices. Although both options offer their own pros and cons, the decision of what is best for you solely depends on your needs.