Before deciding on what estate plan is best for you, it is important to know what a trust is and what it accomplishes.
A trust is an arrangement where a person, called a trustee, holds legal title to property for another person, called a beneficiary. You can be the trustee of your own living trust, keeping full control over all trust property. After you pass away the successor trustee, whom you appoint in your trust, controls your property and distributes it to your beneficiaries according to the directions written in the trust.
There is one overarching reason to create a trust – it avoids probate (what is probate article link). Many people wrongfully believe a will allows an estate to avoid probate as well. This is not true. A will, without a trust, is often what triggers probate.
Many people do not realize everyone has an estate plan, whether they have created one or not. Arizona law dictates how to distribute a person’s property after their death if they do not have a valid estate plan. Again, this process triggers probate. Most people do not want the government controlling the distribution of his or her estate.
If you own real property and you want to leave the property or the proceeds from the sale of the property to multiple people, a trust is likely the best way to ensure a simple distribution of the property once you pass.
Not only does a trust simplify transferring real property, it also can be the best way to distribute investments, bank accounts, and other assets. All you need to do is create a trust and title your assets in the name of the trust. Nothing changes while you are living, other than the name on the accounts and titles. When you pass, your surviving trustee distributes the assets in your trust according to the trust’s terms.
In the right situations, a trust simplifies the distribution of your property for those you love. It can save them time, money, and headaches. A trust is often the best estate planning tool for those with assets over $75,000. If your assets are less than that, you likely do not need a trust.