To put it simply, a trust is a legal document, similar to a will, that contains your instructions for what to do with your assets when you die. But unlike a will, a trust can be used to consolidate any and all of your assets into a single account, provide more privacy, distribute your assets faster, and possibly avoid probate – preventing the courts from taking control of your assets and taxing them when your will is executed.
When you set up a trust, you need to name someone (a trustee) to manage the assets owned by your trust. A corporate trustee is a bank’s trust department or a trust company whose employees will protect and manage the trust based on your needs and wishes.
Even the most financially savvy investors can have trouble deciding how to manage their trust. No one can predict how the market will shift from year to year, and what makes sense for some investors might not make sense for you. When you name a corporate trustee, they will be legally bound to manage your trust as directed, and in the best interest of your estate and its beneficiaries.
A will may not be the best plan for you and your family. That’s because a will must be validated by the probate court before it can be enforced. Also, because a will can only go into effect after you die, it provides no protection if you become physically or mentally incapacitated. A living trust allows you to transfer assets into a trust that you control, while protecting those assets from being seized and taxed by the courts.