A trust is a financial account that can hold money on someone else’s behalf. The trust will have at least one beneficiary, who receives payouts. It will also have a trustee, who is in charge of determining when those payouts should be made.
When making a trust, then, the key is to decide when these distributions should happen. What is the goal of the trust and what is it trying to accomplish that goes beyond simply leaving that person the money in the will? One way to set this up is to base it around specific life goals or milestones.
Going to college
For instance, some trusts are focused on education. The beneficiary may be a minor, so they can’t even inherit directly. But the money could be put into a trust that they can use when they go to college to pay for tuition and other related costs.
Expanding the family
Another such milestone could be when someone gets married. A trust could be very beneficial at this time to cover the costs of the wedding. Or, the trust could pay out to the beneficiary when they have a child. Raising children is very expensive, but the trust can hold the money to ensure that it is used for this important purpose.
Setting an age
Additionally, some people will set the trust up based on ages that the beneficiary is going to reach, assigning certain percentages to specific ages. For example, the person may get half of the money when they turn 21, but they may not receive the full balance of the trust until they turn 35.
These are just a few examples of how a trust can be set up. Consider your legal options when drafting an estate plan.