What Is a Trust?

If you talk to anyone about estate planning, you're likely to hear the word "trust." What is a trust and what does it mean in estate planning?

A trust is simply a vehicle to hold assets. The reasons for creating trusts are varied, but usually including wanting to protect assets and avoid probate. Probate is the legal process by which title to assets are transferred upon the owner's death. By putting the assets into a trust during your lifetime, you can avoid probate.

However, merely creating a trust isn't enough. You still have to fund the trust, which means putting title to the assets in the name of the trust. Too often people create a trust but never fund it. In that case, the trust is like an empty basket. It would be more useful if there was something in the basket.

Whether or not a trust is right for you, and, if so, what kind, are questions best asked of a competent estate planning attorney.