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Were you aware of the fact that almost 1 in 4 people over the age of 50 have a living trust? When used as a part of an estate conversation plan, tursts can help preserve more of your assets for your heirs while minimizing the delays and costs of probate court.

A trust is a legal arrangement where one person or institution controls property given by another person for the benefit of a third party. If you dont have a trust or don't know if you might need one, keep reading to learn more about A-B (bypass) trusts, irrevocable trusts, and life insurance trusts. When used as a part of your planning, these trusts can help safeguard your legacy.

A-B Trusts

With a properly structured A-B provision, a living trust can allow married couples to exempt twice as much of their estate from taxes as they can otherwise. When one spouse dies, the trust is split in two. The surviving spouse s assets are then transferred to the A trust, while the assets of the deceased spouse go to the B trust. Each trust then becomes a taxable entity entitled to the current estate tax exemption ($1.5 million in 2005).

Irrevocable Trusts

An irrevocable trust is established by you relinquishing control of your assets while still alive. Depending on the way the trust is set up, you may or may not get the use of the asset during your lifetime. This is an option you do not want to enter into lightly, as once you give up the asset, you can not get it back.

Life Insurance Trusts

If relinquishing control of your assets is not your cup of tea, why not consider establishing a life insurance trust to pay the estate taxes on any assets valued above the estate tax exemption amount? A life insurance trust will hold an insurance policy in an irrevocable trust, so the policy itself is not taxable. At your death, it can then be used to help give your beneficiaries the cash they need to pay estate taxes.

Just like any other part of your estate plan, you need to reexamine your trusts on a regular basis so as to protect any newly acquired assets and to update your list of beneficiaries.