Consider setting up a trust

You may associate the term “trusts” with wealthy people, and it's true that many upper-income folks include one or more trusts in their estate plans. But people in the middle class may benefit from using trusts, too.

A trust is a legal document that can make sure your financial assets are passed on to your beneficiaries according to your wishes — during your lifetime or afterward. The beneficiaries might include your spouse, children, other family members, charities or pets. The financial assets in the trust are managed either by you or by one or more trustees, which can be trusted people or organizations.

With a trust, you can specify that assets go to named beneficiaries at certain times, such as upon your death or when a child reaches a specific age (say, 30). It can help you distribute the rest of your property, too. And while a traditional will can do that, wills take effect only after you die. A trust can establish arrangements if you're temporarily or permanently disabled and unable to manage your assets.

Trusts can help you and your beneficiaries postpone or avoid some taxes, and assets that are passed on through a trust are often excluded from the probate process. That can make transfers of assets faster and less costly and can keep your arrangements more private.

There are many kinds of trusts, but they're typically either revocable or irrevocable. A revocable trust, also known as a living trust, is one that you can change or cancel (revoke) until you die. An irrevocable one is generally permanent — but can offer more tax advantages.

Trusts tend to be more complicated than wills, and often cost more to create. If you're considering a trust, read more about them, perhaps in “The Complete Book of Wills, Estates & Trusts (4th Edition): Advice That Can Save You Thousands of Dollars in Legal Fees and Taxes” by Alexander A. Bove Jr. and Melissa Langa (St. Martins Griffin, $20). And consider consulting a professional, such as an estate lawyer.