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How trusts fit into estate planning for Delaware residents

When many people think of trusts, they conjure up images of wealthy families and "trust fund babies" who may never have to earn a living. However, trusts can be important parts of estate planning for people from any financial backgrounds. If a Delaware resident's circumstances would best be served by creating a trust, there is no reason not to do so. 

Trusts serve many purposes. In addition to allowing people to minimize estate and gift taxes, they can allow the people creating them to control how their estates are distributed. For example, a parent could realize that a child is not particularly adept at dealing with money. Therefore, giving that child an inheritance outright might not be in his or her best interest. A trust can specify how and when distributions to that child are made, which could help ensure that the assets are available to provide for the child for years to come in a controlled manner.

A trust is created during the lifetime of the individual who is setting up the estate plan. Assets can be transferred in and out of a trust -- and its terms can be changed -- during the person's lifetime, as long as it is created as a revocable trust. Upon death, it would become an irrevocable trust, which cannot be changed.

Irrevocable trusts can also be created during an individual's life as well, but they cannot be changed. Some trusts are created by a inclusion in a will, and these types are also considered irrevocable. The assets held in trust are not subject to probate, which means that beneficiaries will have access to them immediately.

Every person's situation is unique, and fortunately, estate planning can provide for most needs. After a review of a Delaware resident's circumstances, the appropriate recommendations can be made. If that person's interests would be best served by using one or more trusts, an experienced attorney can help create a plan.

Source: finance.yahoo.com, "Understanding the basics of estate planning", Constance J. Fontaine, July 1, 2016

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