Estate Planning and Trusts Tutorial
for Managing Your Personal Finances

Estate planning and trusts need to be a vital consideration as you become more successful with managing personal finances. Different from a typical will, a trust helps to save your family tax money, avoid probate expenses, and allocates what you own based on your wishes after you die. The following trusts information will help you make an informed decision and get you started.

The Basics

A trust is a legal document stating what will happen to everything you owned after you die. The trustee is the one who is designated to carry out these wishes on your behalf. The trustor/grantor (you), is the one who creates the document. Beneficiaries (heirs) are the people who will get what you have, so choose carefully. Yes, the trustee and a beneficiary may be the same person.


Okay. So far, what has been explained to you sounds a whole lot like the typical will and you would be correct. The difference lies in the legal structure and thus the benefits. Estate planning interests is about effectively managing your personal finances after you die to provide certain legal protections for your heirs. State laws vary so do due diligence in your researching before placing money and other assets into a trust.

The main reason people use one of the many different types of trusts instead of Wills is to avoid probate, a court process that can legally take over your assets after your death. When this happens, all of your financial information becomes public. Ah, now you are starting to understand the benefits. During the probate process, a judge will decide who gets your money and other stuff. The two main causes of having to go to probate is not having a will or your will being contested. You certainly do not want this to happen.

With a trust, all of your stated assets are protected and a judge must legally carry out the wishes as stated, without exception.

Types of Trusts

Revocable trusts, special need trusts, life insurance trusts, charitable trusts, and others are available. The most popular are revocable trusts, which may be changed or "revoked" at the whim of the trustor (you). Here is an example to illustrate:

    After gathering and learning all she can about estate planning and trusts, Lynnaea decides to set up a trust to ensure that probate fees are avoided. She designates her sister, Makayla, as both a trustee and beneficiary. Lynnaea's brothers, Caleb and Joshua, are the other beneficiaries.

    When Lynnaea dies, Makayla will be responsible for the carrying out of the instructions set up by Makayla. She will use the money in the trust to pay any debts or financial obligations.(There will be none, of course, because she used an effective household budget process found on this website.) Next, Makayla will sell Lynnaea's car and home as this is what the instructions state.

    What Makayla has essentially done is liquidate the estate assets with the proceeds a (money) being placed inside the revocable trust (which is no longer revocable by the way because of her death). Whatever money and other assets remain in the trust will be split three ways equally between Makayla, Caleb, and Joshua.

    How long this process takes varies by state law, the attentiveness of the trustee and lawyer involved, and the size of the trust itself. Once finished, the trust gets resolved and life continues on.

Quite a simple process if set up correctly.

What about you?

Are you convinced that managing your personal finances effectively includes estate planning and trusts? Be sure to get with an attorney or a legal aide to make sure you have all of your ducks in a row legally so there will be no surprises.

Research all of the trusts information you can until yiou are comfortable with the process. Be sure your life insurance policies, will, and personal financial records are in order to save attorney fees. In the long run revocable trusts could save a whole lot of time, money, and hassle for your family when you are gone.

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