Trusts 101: What They Are and When You Need One

James Nici

When most people think of estate planning, they think of a will. But for many families, a trust can be just as important—if not more so.

 

Whether you’re trying to avoid probate, protect your assets, or provide for loved ones in a structured way, a trust might be the right tool for your estate plan. The key is knowing what a trust is, what it does, and when you actually need one.

 

Here’s a simple breakdown.

 

What Is a Trust?

 

A trust is a legal arrangement where one person (the grantor) gives another person or entity (the trustee) the authority to manage assets for the benefit of one or more people (the beneficiaries).

Trusts can hold a wide range of assets—like real estate, bank accounts, investments, or even family heirlooms—and can operate during your lifetime or after your death, depending on how they’re set up.

 

Types of Trusts: The Basics

 

There are many kinds of trusts, but here are a few of the most common:

 

✅ Revocable Living Trust

  • Can be changed or revoked during your lifetime

  • Avoids probate (unlike a will)

  • Offers privacy, since it doesn’t become part of the public record

  • You can serve as your own trustee while you're alive

✅ Irrevocable Trust

  • Cannot be changed once established (with some exceptions)

  • May offer asset protection and tax benefits

  • Useful for Medicaid planning or large estates

✅ Testamentary Trust

  • Created through your will

  • Takes effect only after your death

  • Often used to manage inheritance for minor children or beneficiaries with special needs

✅ Special Needs Trust

  • Provides for a disabled loved one without jeopardizing their eligibility for government benefits

✅ Charitable Trust

  • Benefits a charitable organization or cause while offering potential tax advantages

 

When Do You Need a Trust?

 

You may benefit from a trust if:

  • You want to avoid probate. A living trust can transfer assets to heirs without court involvement.

  • You own property in more than one state. Without a trust, your estate may have to go through multiple probate proceedings.

  • You have minor children or dependents. A trust can manage and distribute their inheritance over time, with clear rules.

  • You want to control how and when beneficiaries receive assets. This is especially helpful for young adults or individuals with financial issues.

  • You’re concerned about privacy. Unlike a will, a trust doesn’t become public record.

  • You’re planning for incapacity. A trust allows someone you trust to manage your assets if you're unable to do so.

  • You have a high net worth. Trusts can help minimize estate taxes and protect wealth for future generations.

Trust vs. Will: Do You Need Both?

 

In many cases, yes. A trust and a will serve different purposes. A will covers any assets not placed into a trust and allows you to name guardians for minor children. A trust handles the detailed management and distribution of specific assets.

The best estate plans use both to provide full coverage and peace of mind.

 

Start with a Solid Foundation

 

Trusts aren’t just for the wealthy—they’re for anyone who wants to protect their assets, minimize court involvement, and provide a clear, thoughtful path for their loved ones.

 

At Nici Law Firm, we help clients understand their options and build estate plans that work for their unique needs and goals. Whether you're starting fresh or reviewing your existing plan, we're here to help you make smart, informed decisions.

 

Contact us today to schedule a consultation and find out if a trust is right for you.