Lots of myths and misconceptions surround trusts, including the notion that trusts are only for the wealthiest people. In fact, many members of the middle class today use personal trusts to minimize estate taxes, provide for loved ones or favorite charities, or manage financial affairs during and after their lifetimes. A personal trust is a legal arrangement to which a person transfers assets such as investments, life insurance policies, or real estate. You can customize a trust to direct your assets where you want them. The trustee is responsible for investing and managing the assets for the trust's beneficiaries under terms set by its creator.
People set up trusts for a variety of reasons.
They may want to minimize estate taxes. Or they may want to preserve their privacy. When you dispose of your assets or transfer your assets via a will, it's a public document, and anybody can go to the courthouse and read about your assets and the disposition of your wealth. A trust is a private document that allows for the transference of assets in a very private manner. Depending on where you live, a trust can avoid a costly and lengthy probate, or legal validation, of a person's estate after death.