What is the purpose of a trust in estate planning?

In estate planning, the purpose of a trust is fundamentally to legally own property for the benefit of another. This means that the trust holds the legal title to the property while the beneficiaries are entitled to the benefits derived from that property. This arrangement allows for greater flexibility and control over how assets are distributed and managed, often in a manner that can be tailored to meet the specific needs of the beneficiaries.

Trusts can also serve various objectives, such as protecting assets from creditors, managing property for minors or incapacitated individuals, and reducing estate taxes. The creator of the trust, known as the settlor, can outline specific conditions under which the beneficiaries receive the assets, ensuring that their wishes regarding asset distribution are honored, even after death.

In contrast, transferring debts of the estate to heirs, serving as a temporary holder of property, or simplifying the execution of a will do not encapsulate the primary function of a trust. While the management of debts, temporary holding of property, and execution of wills are important aspects of estate planning, they do not capture the essence of what a trust is designed to achieve in this context.