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 When many people hear the phrase “trust fund” discussed, they often imagine a child of rich parents. The misconception is that trusts are only for the very wealthy, set up for their “trust fund babies” to ensure they will never have to worry about anything financial in their adulthood.

The reality is, however, that trusts can be established by people of any financial means and is a very useful instrument for estate planning. Individuals can utilize different types of trusts – including revocable trusts, special needs trusts, and pet trusts – to make sure their loved ones are immediately taken care of without having to wait until the often long, drawn-out probate process is complete.

The following is a brief overview of trusts. An estate planning attorney can provide you with more specific details about your situation and offer guidance of which type of trust would be the best choice for your family.

What are trusts?

Trusts are financial arrangements where assets and property are placed and are overseen by a named person, referred to as the trustee. There are different options for trustees and often depends on what type of trust is being set up and how the trust will be dispersed once the person who set up the trust passes away.

For example, if the contents of the trust will be turned over to the beneficiary upon your death, you can name yourself as a trustee since the beneficiary will have access to the assets immediately. However, if the beneficiary is a minor child then the assets cannot be turned over to them until they are of legal age. Therefore, you will need to name someone as a trustee who will oversee the trust after you pass away and until the child is old enough to receive ownership of the trust.

How can trusts help bypass the probate process?

When assets or property of the decedent has been placed in a trust with a named beneficiary, these assets are not included in the estate’s probate process. This is because once a person puts assets in a trust they have created, they no longer own the assets. Instead, it is the trust that holds ownership, therefore, when the person dies, the assets in the trust are not part of the estate, but instead, go directly to the beneficiary of the trust.

What is the difference between a revocable and irrevocable trust?

Many people choose to establish revocable trusts in order to maintain total control of the assets placed in the trust. They are able to name themselves as trustee and can alter or even cancel the trust whenever they want.

If they choose an irrevocable trust, then they no longer have control of the assets, and the trust itself can never be changed or canceled.

What do I need to do to set up a trust?

In addition to revocable and irrevocable trusts, there are several other different types of trust you can set up that could benefit your family when you are no longer here. For example, a special needs trust can be set up for an adult child with special needs to make sure they will be taken care of, but that those funds will not interfere with any government assistance they may be entitled to.

 An estate planning lawyer can help you determine what type of trust is the best type for your situation. Call a Wilkes-Barre, PA estate lawyer from Hoegen & Associates, P.C. to find out what type of trusts and other tools can benefit your estate plan.