As the time approaches that you begin to think about preserving and passing along your assets to the generations coming after you, certain terms like wills, beneficiaries and bequests become quite familiar. One term you might hear mentioned may have an uncertain meaning. What is a trust?
How does a trust work and does it have any bearing on the planning of your estate? A simple example can demonstrate what this legal instrument is and why it is sometimes so important.
A trust can make all the difference
You may have known some very traditional Georgia families in which the wife never drove a car, signed a check or paid a bill. In such cases, a woman in her later years should not have to master these tasks most women today learn in their teens. Many times in such cases, the thoughtful husband would establish a legal trust, meaning a third person or institution would step in at his death to handle all his wife’s financial matters.
There are many reasons to establish a trust
Though most Georgia women today are quite capable of dealing with financial matters, there are many other important reasons to set up trusts where a third party oversees financial concerns:
- Some beneficiaries may be legal minors at the time of your death
- Some beneficiaries may have impairments that prevent them from making sound decisions
- Some beneficiaries, such as institutions, may need to receive incremental benefits
- Some beneficiaries may need shelter from tax burdens
Often, the surest way to bestow your assets in your absence is a legal trust.