When a loved one passes away and decides to leave some of their assets in a trust, the trust then governs what happens with that money. This goes beyond merely what is written in the will.
For instance, a person may consider leaving $100,000 to a grandchild so that they can pay for school. However, they may worry that the grandchild won’t spend it on school at all. To cope with the potential issue, the grandparent can put the money into an educational trust so that it can only be used in that specific fashion.
As the trust is being administered and used as directed, it’s important to understand the goals that every trust has. Some of the most common goals of trusts include:
- Making sure that assets really get distributed in the proper way
- Reducing the taxable value of the estate and moving assets out of that estate
- Keeping the wealth transfer process private and out of the public record
- Ensuring that things are done efficiently and with as little confusion as possible
- Giving the person who passed away more control over their assets, even after death
- Preserving wealth and keeping it in the family.
Overall, trusts are about control and planning. Rather than letting heirs make bad decisions, trusts allow the person leaving the money behind to choose how the money is used.
Understanding the goals of a trust can help you better understand how to administer one in the future. Knowledge can make it easier to follow the grantor’s wishes moving forward as you administer the trust.
If you’re still uncertain about how to administer a trust that was left in your care, an attorney with experience in that area may be able to guide you.