How does a trust work to protect assets for future generations?
A trust is a legal agreement that allows an individual, known as the settlor, to pass on assets to future generations. In Washington, trusts are typically used to protect a settlor’s assets from being subject to any estate taxes, creditors and other legal obligations that may come upon the settlor’s death. Trusts can be created by the settlor’s will, or during their lifetime. In the former case, the settlor will include instructions in their will to establish the trust. In the latter, the settlor can use a trust agreement and appoint a trustee to manage the trust assets. When the trust is set up, the settlor can decide to put the trust assets into a bank or other financial institution, or have them managed by the trustee. Assets such as securities, real estate and cash can be put into the trust, or the settlor can give the trustee the power to buy or sell assets. The trustee is then responsible for managing the trust assets and ensuring that the trust terms are followed and all beneficiaries get the assets they are entitled to in accordance with the trust terms. The trustee is also responsible for filing the necessary tax returns on behalf of the trust. Trusts are a great way to ensure that assets are protected and handed down to future generations. They allow the settlor to control how their assets are distributed and managed while they are alive, as well as after they die.
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