Learn something new every day
More Info... by email
The estate planning process refers to the arrangement by any owner of tangible property, such as land, airplanes, money and other types of property for the distribution of the same. In other words, estate planning refers to the processes whereby someone will put his or her affairs in order in terms of delineating recipients for property, all of which are targeted toward ensuring that such items are not left unaddressed when the individual dies. As such, the relationship between estate planning and trusts lies in the fact that trusts are instruments an individual can use to tidy up loose ends by clearly stating the terms under which any property will be administered and divided.
In this situation, the relationship between estate planning and trusts is the fact that the individual making the trust uses it as an instrument for putting his or her affairs into the hands of a fiduciary who will administer such property according to the wishes of the person making the trust. The trust administrator may be a trust company or only one or two persons. In either scenario the duty remains the same, which is to equitably manage the trust property for the beneficiaries of the trust to the best of their abilities. The creation of a legal trust relationship confers obligations on the trust administrator, including that of due diligence in the administration of the trust property for the benefit of the beneficiaries.
Another link between estate planning and trusts is the fact that estate planning may be favored by some individuals over wills due to some perceived advantages inherent in the use of trusts for the purpose of estate planning. An advantage of a trust is the fact that it allows the owner of the property to distribute the property to stated recipients in a manner that allows him or her to control the distribution of such property even after death. For example, a mother could create a trust to benefit a young son who may be only 10 years old at the time of her death. As part of the provisions of the trust, the mother could specify to the trust administrators that her son will only inherit half of the property upon reaching the age of 21, and will receive the rest of the age of 35, after fulfilling a stated condition. Her purpose for doing this might be to ensure that the son becomes a responsible man in the future, and in this way she is able to combine estate planning and trusts.
One of our editors will review your suggestion and make changes if warranted. Note that depending on the number of suggestions we receive, this can take anywhere from a few hours to a few days. Thank you for helping to improve wiseGEEK!