Trusts can provide potential benefits like control, incapacity protection, potential probate avoidance and tax planning opportunities. A trust can be a useful tool to incorporate in your estate strategy. There are many types of trusts and reasons why each type could make sense for you, depending on your financial and personal situation.

That's why we believe answering this question requires a team approach. Your financial advisor can help you start this process by working to identify and prioritize your goals and then coordinating your team of tax and legal professionals.

What is a living trust?

The most common type of trust is called a revocable living trust.

A living trust:

  • Lets you keep control of your assets while you are alive
  • Allows you to name a person or entity to manage or distribute your assets as directed in your trust if you die or become unable to take care of this on your own

Why set up a trust?

Setting up a trust could be a good financial decision for anyone who wants to protect their assets while creating the legal framework for managing and distributing those assets. With a trust, a trustee (an individual or designated third party) acts as a custodian for the assets held within a trust. The trustee is responsible for managing and administering the finances of a trust according to the instructions in the trust documents.

Potential benefits of a trust

  • Allows for someone to continue to manage your assets (like property and investments) if you become incapacitated
  • States how your assets are distributed upon your death
  • Avoids probate

Trust considerations

  • Assets must be titled in the name of the trust to be considered part of it.
  • Consider upfront costs (attorney fees, etc.).
    • Creating a trust involves upfront costs, but it can help avoid expenses and hassles later. For example, because the trust owns assets rather than you owning them as an individual, you may be able to avoid probate.

4 steps to set up a trust

  1. Designate a trustee. The trustee you choose will manage your trust in the event of your incapacitation or death. A trustee can be a family member, friend or a corporate, third-party entity like the Edward Jones Trust Company.
  2. Designate your beneficiaries. Beneficiaries are individuals or a group of individuals for whom a trust was created. You can designate one or more beneficiaries, and they can be family, friends or a charitable organization.
  3. Draft trust documents. You should work with an attorney to create trust documents to ensure your legacy and financial goals are incorporated.
  4. Fund your trust. Once your trust is set up, the final step is to fund it.

How we can help

Your attorney can help you determine if the benefits of a trust outweigh the costs and if this strategy makes sense for your situation. Talk with your Edward Jones financial advisor today to get started planning for your future.

Important Information:

Edward Jones, its employees and financial advisors are not estate planners and cannot provide tax or legal advice. You should consult your estate-planning attorney or qualified tax advisor regarding your situation.