Instead of leaving property to various people outright in your will, you can direct that all or part of your estate be held in trust for specified family members or other beneficiaries. For example, your will could direct that trust property be held for the benefit of your spouse for life, then distributed equally among your children when your spouse dies. By creating a trust in your will, you can:
- Free your spouse or other beneficiaries from investment and management responsibilities
- Determine the ultimate beneficiaries of your estate
- Control how your beneficiaries will use and enjoy your property.
When you die, your estate will transfer specified property to the trustee according to the provisions in your will. The trustee will then pay trust income and principal to the trust beneficiaries as directed by the trust document. For example, depending on the needs of your beneficiaries, you might provide that they receive a specified amount, or the income produced by the trust, or income plus whatever amount of principal they request or need.
When writing your will, you should compare creating a trust to making outright gifts and determine which will best accomplish your personal objectives. Consider that a trust can provide an annual income to a family member plus a deferred gift to a nonprofit organization, such as Indiana University. Or conversely, you can create a trust that will provide an annual income to a charitable organization, then pass the remaining trust property to family members after a specified number of years.