Estate planning involves distributing physical assets, and trusts are tools used to administer and divide property according to the owner’s wishes. Trusts allow for control of distribution even after death and may be favored over wills for their perceived advantages.
The estate planning process refers to the disposition by any owner of physical assets, such as land, aircraft, cash, and other types of assets for distribution. In other words, estate planning refers to the processes by which someone will put their affairs in order in terms of delineating the recipients of the estate, all aimed at ensuring that those elements are not left unanswered when the individual dies. As such, the relationship between estate planning and trusts lies in the fact that trusts are tools that an individual can use to sort out 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 the trust is that the individual creating the trust uses it as a tool to place their affairs in the hands of a trustee who will administer that property according to the wishes of the person making the trust. The administrator of the trust can be a trust company or just one or two people. In both scenarios the duty remains the same, which is to manage the trust property fairly for the beneficiaries of the trust to the best of their ability. The creation of a statutory fiduciary relationship confers duties on the trustee, including due diligence duties in the administration of the trust estate 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 estate planning purposes. An advantage of a trust is that it allows the owner of the property to distribute the property to declared recipients in a way that allows him to control the distribution of that property even after death. For example, a mother might set up a trust for the benefit of a young son who might be only 10 years old at the time of her death. As part of the trust provisions, the mother could specify to the trustees that her child will inherit only half of the property when he reaches the age of 21 and will receive the remainder at age 35, after meeting a stated condition. Her aim may be to ensure that her son becomes a responsible man in the future, and in this way she is able to combine estate planning and trusts.
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