A trustee is a fiduciary which, essentially, is a person that owes a legal, ethical and, perhaps, moral obligation to act in the interest of another.
A trust is a legal vehicle that allows a third party, a trustee, to hold and direct assets in a trust fund on behalf of a beneficiary. A trust greatly expands your options when it comes to managing your assets, whether you’re trying to shield your wealth from taxes or pass it on to your children.
An estate plan tells your heirs and the courts how to divide up your assets, but it also helps protect your loved ones from unnecessary hassle and expense–as well as potentially months, even years, tied up in the court system settling your estate.
If you are drawing up your will and want to leave money to a minor child, using a testamentary trust is one way to do so. This legal document can also be beneficial in other situations, such as if you want to leave an inheritance to someone but aren’t sure they will use the gift wisely.
Trust funds are not just for the ultra-rich. These sophisticated estate-planning tools can make just as much sense for middle-class Americans who own a home and have a net worth of at least $100,000.