An estate trust is an arrangement that allows a designated third-party to hold assets in the interest of named beneficiaries, states Fidelity. People often use estate trusts to specify the exact time that beneficiaries receive the assets included in the estate, ensuring their property does not go through probate.
Because a trust usually keeps assets from having to pass through probate, beneficiaries may be able to gain faster access to those assets, explains Fidelity. This helps to save court fees and may also help in reducing any taxes that may otherwise be imposed against the estate.
Estate trusts help individuals keep control of their wealth, because the person establishing the trust can specify the terms of his trust, keeping complete control over who distributions are made to. If a person sets up a revocable trust, he is able to have access to his assets for the remainder of his life, and the assets then pass to the beneficiaries after his death, states Fidelity.
There are a few different types of trusts a person can establish. A marital trust helps to provide benefits to a surviving spouse; a charitable remainder trust allows someone to receive a steady stream of income while designating that the rest of the money go to a charity; and a qualified terminable interest trust provides an income for a surviving spouse with the intention of the assets being distributed to other beneficiaries after the spouse's death, explains Fidelity.