Trust & Estate Planning

Map out your family's future and leave a legacy with well-drawn wills, the right types of trusts, and careful estate planning.

Estate Planning Basics

To set up a trust, you first need to decide what kind of trust best suits your needs. Once you know how you’d like the trust to be structured, you’ll need to draft a trust document, either on your own or with the help of an estate lawyer, that lays out the grantor, trustee, beneficiaries, and assets. Then you sign and notarize the trust document and set up a trust account in which the assets are deposited.

To give someone power of attorney means to give them the legal authority to act on your behalf. Power of attorney can be issued to more than one person and can entail varying degrees of authority. For example, you can give someone limited power of attorney that applies to a very specific action (e.g., closing on the sale of your home). Or you can give someone what’s called “springing” power of attorney, which can give them broad or narrow authority that only kicks in under specific circumstances, like your incapacitation.

Yes, you can contest a decedent’s will if you believe you have been unjustly removed from it. However, you will need to prove to a judge that the testator (i.e., the person whose will it is) was coerced into removing you from their will, lacked the mental capacity to understand they were writing you out of their will, or that the document in question was falsified.

To revoke or close a revocable trust, you first need to remove all assets from the trust. Then, you need to draft a formal declaration of your wish to dissolve the trust. These can often be downloaded online or acquired through a probate court, but make sure to consult a lawyer to ensure your form complies with local laws. Then, the grantor must sign with form with a notary acting as witness, and either file the form with the court where the trust was registered or append the form to existing trust documents.

Key Terms

A trust is a legal framework that enables one party, a trustor, to give another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trust’s can be established for a variety of reasons, some of the more common ones being to protect the grantor’s assets and to manage the transfer of assets to a beneficiary.

An irrevocable trust is a trust that cannot be modified or dissolved without the permission of the beneficiary (or beneficiaries). The grantor of an irrevocable trust gives up all rights of ownership to the trust and the assets therein. The assets put in irrevocable trusts are not considered part of the grantor’s estate for estate tax purposes, which can offer the heirs of sizable estates significant tax benefits.

Step-up in basis refers to a provision in the U.S. tax code that allows for the cost basis of an inherited asset to be adjusted to its fair market value on the date of the decedent’s death. When an asset is sold, its cost basis (i.e., the price it was bought for) is subtracted from its sale price to determine the investor’s taxable gain or loss. Step-up in basis significantly reduces the taxes owed on capital gains from inherited assets, which is why it is often criticized for shielding the rich from fair tax treatment and exacerbating wealth inequality.

Per stirpes is a Latin term meaning “by branch.” In the context of wills, it is a legal term stipulating that should a beneficiary predecease a testator—the person who has made the will—the beneficiary’s share of the inheritance goes to the beneficiary’s heir rather than the testator’s other beneficiaries.

Conservatorship is a legal arrangement in which a court appoints a party, the conservator, to manage the personal and financial affairs of a minor or person deemed incapacitated. Conservatorships came to public attention in 2021 when singer Britney Spears sued to end a 13-year conservatorship overseen by her father that she decried as exploitative and abusive.

Probate is the legal process in which a will is evaluated to determine if it is valid and authentic. Probate also involves assigning the executor or (if there is no will) the administrator of the estate. States will often exempt estates below a certain size from probate. And some assets, like retirement accounts with a designated beneficiary or the contents of a trust, are not required to go through probate.

A special needs trust is a fiduciary arrangement that provides people with physical or mental disabilities or chronic illness with income that does not impact their eligibility for disability benefits offered through Social Security, Medicare, or Medicaid. Assets—the beneficiary’s and/or a third party’s—are put in trust and managed by a trustee, who dispenses the money according to the terms of the trust.