A will isn’t the only way to transfer your assets upon your death. Trusts are a useful tool that can be used to achieve a maximum amount of control over how your assets will be distributed among your loved ones and other beneficiaries. Trusts may also reduce the amounts spent on probate court and estate taxes.

So, Just What Is a Trust?

A trust is a fiduciary agreement that allows a third party to hold assets on behalf of a beneficiary. That third party may be any adult who is competent and has no felony convictions. However, it’s a good idea to select someone who has an adequate knowledge of asset transfer and is impartial — like a lawyer, accountant or trustee service.

A trust will either be revocable or irrevocable. A revocable trust allows you to maintain control of your assets while you’re still alive. You may make changes at any time to how the assets will be distributed upon your passing. While a revocable trust will often prevent assets from having to pass through probate, it’s still subject to estate taxes. Once you’re gone, it becomes an irrevocable trust, and no changes can be made.

You may also set up an irrevocable trust while you’re alive. Doing so requires that you give up control over the assets within. Once it’s executed, the trust is no longer part of your estate and, therefore, in addition to avoiding probate, its assets will generally not be subject to estate tax (depending on the laws in your state).

It’s worth noting that a trust does not replace a will. Trusts usually deal with specific distribution of specific assets, whereas a will governs your entire estate a bit more generally. Think of a trust and a will as two pieces of a whole.

How to Set Up a Trust

It’s possible to form a trust on your own with the help of some software with detailed instructions. Expect to do a lot of legwork getting documents notarized. However, there are many different kinds of trusts, and laws regarding the different kinds vary widely from state to state. So, for anything other than the simplest of trusts, it’s a good idea to enlist the help of an expert. Find a reliable estate attorney to help guide you through the establishment of a trust. It’s common to use the same attorney to set up both your will and trust.

When to Get a Trust

The rule of thumb for when to set up a trust in addition to a will is when your net worth totals more than $100,000. You can expect the costs of estate planning to be a few thousand dollars, but you’ll save (or, rather, your beneficiaries will save) a great deal by avoiding probate, and reducing the estate tax to a (legal) minimum. There will also be fees to administer the trust after you have passed away, but if you have significant assets, the fees will pale in comparison to the savings.

Even if you don’t have a substantial net worth, a trust could still be useful if you have assets you want distributed in a specific way over time. For example, you may have $25,000 that you want distributed to a grandchild in $5,000 increments over the course of five years. Just be sure that the setup and administration fees don’t eat up the assets you’re trying to protect.

A trust is a great tool to ensure that your valuable possessions end up where you want them. There is some cost involved in setting up and administering a trust, and it requires planning, but once set in motion, you can trust that you’ll rest easy.