To many Ohioans, estate planning is a difficult topic to broach. One reason is because many individuals are afraid to confront their own mortality. Another common reason for procrastination is a fundamental misunderstanding of estate planning. We hope to make the topic easier to think about and increase your understanding of estate planning, so you can feel comfortable developing an estate plan that meets your and your family's needs.
This week we will generally look at trusts. These legal vehicles, which can either supplement or replace a will, allow an individual to transfer title to certain assets to a trustee who will then manage those assets for the benefit of another individual, known as the beneficiary. There are a number of different trust types, but they generally fall into one of two broad categories: testamentary trusts and living trusts.
A testamentary trust transfers property to a trust only upon the estate planner's death. However, this type of trust is not automatically created. Instead, a will usually dictates that certain property will be placed in a trust upon the individual's passing.
A living trust, on the other hand, is created while an estate planner is still alive. During the course of the creator's life, he or she can transfer property into the trust in hopes of avoiding probate once he or she passes. This type of trust can be revocable, meaning that its terms can be changed or cancelled at any time, or irrevocable, meaning the terms cannot be changed once the trust is created.
Each type of trust has its advantages and disadvantages. Choosing estate planning tools that further your best interests is a matter of understanding your options and making the decisions that are right for you and your family.