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If you haven’t thought about creating a trust, you are not alone. Trusts are a useful financial planning tool many have yet to discover. The common school of thought is that you must be super-rich to open a trust. This is not true. The reality: trusts are great financial planning tools for anyone interested in protecting their assets and planning their financial future. Trusts provide levels of ease and control a will simply cannot. Before planning your estate or creating a will, see how a trust can help you pursue your financial goals. Get to know the basics, the benefits, and the types of trusts you can use:

What is a Trust?

For many people, they’ve heard of a trust and their exposure stops there. Not a problem. Trusts are fiduciary agreements placing assets under the control of legal representative, called a trustee. The trustee oversees management of the assets on behalf of those listed to receive them, called the beneficiaries. Generally, upon death trustees facilitate transfer of assets to beneficiaries, according to the directions received.


The Advantages of a Trust

A trust is not the same as a will.  While both agreements handle the transfer of assets upon death, trusts offer advantages over wills.  Trusts offer several advantages for protecting your assets and your loved ones, including:

Avoid Probate Court.

The most common reason people create trust accounts is to avoid probate. Probate is a court proceeding where creditors can make claims on your assets. This means any creditor, legitimate or not, may make a claim you must then defend against. Probate proceedings already exist in the shadow of a painful loss. False claims, frustrating proceedings, and dwindling assets all make probate an unpleasant experience worth circumventing if possible. Assets placed into a trust generally avoid probate completely. A trustee can distribute assets within a trust quickly, without court involvement or public scrutiny.

Keep Your Privacy.

Death is a matter of public record and court is a public venue. This means assets placed in probate court will become a matter of public record as well. If you wish to keep your financial and personal life private, consider a trust for the protection and distribution of your assets.

Increase Your Control.

There are many types of trusts available. The types of trusts offer different and increased levels of control over its assets, compared to that possible with wills.

Potentially Avoid Estate Taxes.

Few people have the necessary cash on hand to pay estate taxes at the time of death. This often leads to the unwanted sale of assets to create the cash needed. Assets placed into certain trusts can typically avoid taxation completely. A trust can help you avoid placing undue stress on the ones left behind to manage your affairs.


Types of Trusts

Your own financial goals will help determine the right type of trust to suit your needs. Using the right trust can help ensure a smooth and trouble-free transfer of assets. Some of the more common types of trusts include:

“A” Trusts

A Trusts are also known as marital trusts. These trusts are specifically designed for providing benefits to a surviving spouse.


“B” Trusts

Referred to also as bypass trusts, these trusts shelter surviving beneficiaries from the taxation of bequeathed assets.


Charitable Lead Trusts

These trusts ease the donation of assets to charity, with the rest distributed among other beneficiaries.


Charitable Remainder Trusts

Organize a set income distribution with remaining assets distributed to the organizations of your choice.


Generation-Skipping Trusts

As the title suggests, these trusts securely distribute assets to later generations, such as grandchildren.


Grantor Retained Annuity Trusts

Shortened to GRAT, these allow the shift of appreciating assets to beneficiaries.


Irrevocable Life Insurance Trusts

Another acronym, an ILIT is funded with life insurance and the death benefit bypasses the decedent’s taxable estate.


Qualified Terminable Interest Property Trust

These trusts allow an income for a surviving spouse and upon their death, distributes remaining assets to listed beneficiaries.


Revocable Trusts versus Irrevocable Trusts – What gives?

At the basic level, a revocable trust allows changes by the grantor after creation. Irrevocable trusts are unalterable once the transfer of assets is complete. This isn’t a bad thing! There are many reasons to choose either trust depending on your own needs.

Choosing the Right Trust

Your needs, your assets, and even your state laws have a bearing on which trust will be the right fit for you. Before you draft a will, see what a trust can do for you. You can exercise more control over your assets than you may think. Protect your loved ones and support your organizations without lengthy court battles.  Create a secure trust designed around your personal estate. At Overland & Shanahan, we can help you find the right trust strategy for your needs. Contact our wealth advisors today at (858) 792-7027 to create a financial plan you can trust.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Overland & Shanahan Wealth Advisors is not a law firm and the above should not be construed as legal advice.