What Is a Trust—and Do You Actually Need One?

Trusts can be incredibly useful when it comes to estate planning, managing your assets, or making sure the people you care about are protected. And while there are lots of different kinds out there, each one serves a unique purpose depending on your needs. So let’s start at the beginning.

What is a trust, exactly?

At its core, a trust is a legal tool that lets someone (the “grantor”) transfer their property to another person or entity (the “trustee”), who then holds and manages it for the benefit of someone else (the “beneficiaries”). Depending on how the trust is set up, the grantor might still have access to the assets, or they might not. The trustee has a legal obligation to follow the terms of the trust and use the assets as outlined. Trusts can be set up while someone’s still alive (these are often called living trusts) or created through a will to take effect after death (known as testamentary trusts).

Let’s talk through a few of the most common types:

Revocable Living Trust: This one’s created during your lifetime and, as the name suggests, it can be changed or completely revoked while you’re still around. It’s a great option if you want to stay in control of your assets but avoid probate later on.

Irrevocable Trust: This type locks things in. Once it’s set up, you can’t change it without jumping through some legal hoops. It’s often used for things like asset protection or tax planning.

Testamentary Trust: Unlike a living trust, this one gets created after you pass, through instructions in your will. It’s commonly used if you have kids who are minors or if you want a little more control over how assets are passed down.

Special Needs Trust: If someone you love receives public benefits like Medicaid due to a disability, a special needs trust might be essential. These need to be carefully drafted to make sure the person’s benefits aren’t put at risk while still giving them financial support.

So, when does setting up a trust actually make sense?

If you want to avoid probate (which can be a time-consuming and often expensive court process), a trust is usually the go-to option. They’re also useful if you have minor children, family members with disabilities, or if you’re trying to protect assets from potential creditors or lawsuits. That said, even with a trust in place, I always recommend having a will, just in case something doesn’t end up titled in the name of your trust like it should.

Bottom line: trusts can be a powerful way to protect what you’ve built and make sure your wishes are followed. But they’re not one-size-fits-all. If you’re curious about whether a trust makes sense for your situation, or you just want to understand your options, reach out. I’m happy to walk you through it. Request a consultation or call me at 402-259-0059.