A trust is an agreement where assets are held and managed by one person (trustee) for the benefit of another person (beneficiary). Trusts come in many shapes and forms. There are Revocable Living Trust, Bypass Trust, QTIP Trust, Crummey Trust, Irrevocable Life Insurance Trust, Generation Skipping Trust, and Grantor Retained Annuity Trust, to name a few. What they are and how they are used requires a detailed discussion. The point is that a trust can be used in many ways. For example, it can:

1. Minimize federal and state estate taxes;
2. Maximize the protection of your beneficiaries, especially when they are minor children or unable to properly manage assets;
3. Purchase life insurance on your life and keep the insurance proceeds out of your estate for federal estate tax purposes;
4. Offer protection against creditors;
5. Protect your privacy, given unlike a will, a trust is confidential and not a public document; and
6. If it is a living trust, it can avoid probate, lower estate administration fees,and speed the transfer of your assets to your beneficiaries.

I have clients who say trusts are only for the wealthy. Not true. While a trust can be used to minimize federal and states taxes on death, they are also used to ensure your wishes are carried out. Think about these issues:

• Do you want to leave all your money outright to your children?
• Would my children use the money wisely?
• Will the money be protected if my child goes through a divorce?
• Will the money be protected from my child's creditors?

If you are like most parents, your answers to these questions are a resounding NO. That is where a trust becomes important. With a trust, you can teach your children how to fish as opposed to providing the fish. With a trust, you can ensure the money you worked hard for is not squandered or spent foolishly. With a trust, you can ensure your financial legacy is a lasting one. With a trust, you have the ability for your legacy to be more than a financial one.

Given there are many different trusts used for different reasons, you need sit down with a legal advisor to understand how a trust can fit into your estate plan. Remember, a trust is not just for the wealthy. Trusts are valuable tools for everyone in estate planning.