The Truth About Trusts

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Trusts are just one option for preserving your property and reaching your goals.

Credit: iStock

One legal tool your estate planner may use to protect your land is a trust. It’s a complicated concept, but learning the basics will help you discuss it with your estate planner and stay in the loop.

A trust is a kind of contract that sets up a relationship between three parties: the grantor who creates the trust, the trustee who manages the trust property, and the beneficiary who benefits from the trust property.

This set-up lets you set aside your property to specifically benefit certain individuals or organizations. It makes it possible, for example, to name a 1-year-old great-grandchild as a beneficiary and know that the property will be managed for his or her benefit for a lifetime, because trustees have to meet strict legal standards.

Because the trust—not the beneficiary—owns the property, it has some protection from creditors and may be taxed differently too.

A trust can also enable you to control what happens to your property well into the future. It can include restrictions that prevent your beneficiaries from selling the property for development, or that require them to manage the property a certain way.

The trust, with all its restrictions and requirements, dissolves 21 years after the longest living beneficiary dies. In many states, it dissolves 90 years after its creation. Either way, it provides long-term—if not permanent—protection.

Trusts are just one option for preserving your property and reaching your goals. Your attorney or estate planning professional can help you decide if it’s right for you.

What if I want to protect my property forever? Conservation easements or agreements can offer that kind of protection, and they’re much more flexible than you think.