A trustee administers the trust, making investment decisions, paying taxes and distributing the income. For example, some parents and grandparents choose to establish an irrevocable trust for the benefit of the child. This alternative offers the advantage of easily restricting the child's access to the assets once he or she reaches the age of majority. In states where the custodial account must terminate at age 18, the trust you establish need not terminate until the child reaches age 21. In fact, under certain circumstances, the terms of the irrevocable trust may continue even after age 21.
Trusts can be effective estate planning tools in many different circumstances.
The more wealth you've accumulated, the more important it is to have a comprehensive plan using trusts to disburse your assets. Otherwise your heirs could have to pay a substantial amount in estate and income taxes. Trusts also let you avoid probate court in which a court-appointed person divides your assets. It is important to understand the different types of trusts available and how they can work for you. You should note that you will need the services of an attorney to draft the trust document.