Trusts are important financial instruments in estate planning. Unlike a will, with a trust, you can legally arrange your estate in a way that saves your family a substantial amount of money on taxes, avoids probate and those expenses, and distributes your assets according to your wishes after you're gone.

What is a Trust?

The most common type of trust is a legal arrangement that someone sets up to designate what will happen to their assets upon their death. Typically, such trusts name a “trustee,” a person who’ll be responsible for carrying out the trust’s instructions.

The person setting up the trust, known as the “trustor” or “grantor,” also names beneficiaries of the trust funds. Beneficiaries are the people who’ll receive the assets when the trustor dies.

A trustee is legally appointed by the trustor to be responsible for managing the funds for the beneficiaries of the trust. You probably know that beneficiaries...

How to Create an Estate Plan

An estate plan is an important part of organizing your future. Legal forms used in estate planning let you stay in control of your care in the event of incapacitation and establish how your assets will be passed along when you pass on.

1. Find an estate planning attorney. You will need an experienced attorney to help you put together an estate plan. This can be a complicated matter that requires a great deal of legal paperwork.

2. Organize your files and examine your assets. Your attorney will need to see the details of your assets.

 3. Discuss potential issues with your attorney. Do you anticipate a big fight among your children once you're gone? Do you have extensive debts that need to be paid?

 4. Ensure you have a will. You may also want a living will so your wishes for your medical care are followed if you become incapacitated.

 5.File beneficiary forms and make final...