Trusts: Vehicles to Carry Out Your Legacy

For many families, estate planning is about more than the orderly transfer of assets. It is about intention, protecting what you have built, caring for those you love, and planning thoughtfully about the future. Trusts can play a meaningful role in that effort. 

At their core, trusts are estate planning tools that allow you to establish clear instructions for how assets are managed and distributed, both during your lifetime and after your death. When thoughtfully designed, a trust may help preserve wealth, support charitable goals, fund education for future generations, and provide care for loved ones with special circumstances. 

What is a Trust? 

A trust is a legal arrangement between the person who creates it, known as the grantor, and a trustee, who is responsible for managing the trust’s assets according to the grantor’s instructions for the benefit of designated beneficiaries. A wide range of assets may be held in trust, including cash, securities, real estate, insurance policies and certain collectibles. 

While a will distributes assets at death, many trusts are designed to function during the grantor’s lifetime. In addition, assets held in trust generally avoid probate, which can help reduce delays, costs and public disclosure. For families who value privacy and continuity, this may be a meaningful advantage. 

Why Trusts are Used 

Trusts are often incorporated into estate plans to help address specific objectives, such as: 

• Providing for family members across generations 
• Establishing ongoing financial support for yourself or a spouse 
• Managing or mitigating potential estate tax exposure 
• Caring for a loved one with special needs 
• Fulfilling charitable or philanthropic intentions

Because different goals require different structures, there is no single “best” trust, only the trust that is most appropriate for your circumstances. 

Common Types of Trusts 

Living Trusts 

A living trust is created during your lifetime and can help provide that assets are managed smoothly in the event of incapacity or death. You name a successor trustee, an individual or corporate trustee, who may step in immediately without court involvement. 

Living trusts are commonly used to avoid probate, maintain privacy and provide structure for beneficiaries who may benefit from professional oversight. 

• Revocable living trusts may be amended or terminated by the grantor during life. 
• Irrevocable living trusts generally cannot be changed and are often used for asset protection or tax planning purposes. 

Marital Trusts

 Marital trusts allow assets to be placed in trust for the benefit of a surviving spouse. For larger estates, these trusts may help maximize available estate tax exemptions while also providing flexibility in blended family or second-marriage situations. 

Generation-Skipping Trusts 

When children are financially secure, a generation-skipping trust may allow wealth to pass directly to grandchildren or great-grandchildren, potentially reducing the cumulative impact of transfer taxes over time. 

Special Needs Trusts 

Special needs trusts are designed to support individuals with disabilities while preserving eligibility for certain government or private benefit programs. Trust assets may be used to supplement, not replace, those benefits, helping to enhance quality of life without jeopardizing assistance when properly structured. 

Life Insurance Trusts 

A life insurance trust owns a life insurance policy on the life of the grantor and is named as the beneficiary. Upon death, the trust may provide liquidity to help pay estate expenses or taxes, with remaining proceeds distributed according to the trust’s terms. 

Charitable Trusts 

Charitable trusts can support the organizations or causes you care about while integrating income and estate planning considerations. 

Please be aware that there may be substantial fees, charges, and costs associated with establishing and maintaining certain charitable trusts. 

The Value of Professional Guidance 

Trusts can add strength and sophistication to an estate plan, but their complexity makes careful planning essential. Laws, tax considerations, and family dynamics all play a role, and trust structures should be reviewed periodically to ensure they remain aligned with your objectives. 

Working with qualified legal, tax, and financial professionals, including your financial advisor, can help ensure that a trust strategy is thoughtfully designed, properly implemented and well-integrated into your broader financial plan. 

A Thoughtful Next Step 

Estate planning is not a one-time event. Life changes, priorities evolve, and regulations shift. Taking the time to review your current plan, or begin one if you have not, can provide greater clarity and confidence for you and your family. 

If you would like to explore how trusts may fit into your overall estate and legacy planning strategy, consider scheduling a conversation with a GDS advisor. A personalized discussion can help identify planning considerations, outline potential options, and determine whether additional professional guidance may be appropriate. 

GDS Wealth Management is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training. This material is for general informational purposes only and does not constitute investment, tax, or legal advice. GDS Wealth Management does not provide tax or legal advice. You should consult a qualified professional regarding your specific situation. Investing involves risk, including possible loss of principal.