Beneficiaries

• Before a trust takes effect you must first write a trust document that contains instructions on how the trustee should manage the trust's assets. The document must name a trustee, who must manage the trust and trust beneficiaries who will receive a share of the assets held in the trust upon your death. Finally, you must include a list of the assets you wish to include in the trust. Generally, people writing trusts work with a trust attorney who can ensure the trust document complies with state requirements.
  
  

Probate Avoidance

• Wills and trusts contain detailed information about the settling of your estate. However, a will only takes effect when a probate judge establishes the validity of a will during probate proceedings. Family members excluded from your will can contest the will, and creditors can make claims on your assets during those proceedings. Your heirs may have to spend a significant sum of money on legal fees during the probate process. If you write an irrevocable trust instead of a will, the trustee can liquidate the trust and pass your assets to your heirs without delay.
  
  

Income Taxes

• Taxpayers in the United States have to pay taxes on earnings from investment holdings as well as realized capital gains on real estate sales and profits realized from other ventures. Generally, tax rates rise as you earn more money. If you pass control of your assets to a trust then you do not have to pay taxes on gains realized on those assets. This means your own tax burden falls.
  
  

Death Taxes

• When you die the Internal Revenue Service can assess an estate tax on your assets before funds are passed to your heirs. The estate tax applies to estates with a value in excess of $3.5 million and can significantly reduce the amount of money your estate beneficiaries receive. However, if you have an irrevocable trust, you and the trust are separate entities, which means your death creates no tax liability for the trust. Therefore, your heirs only have to contend with their own tax burdens and not estate taxes.