A trust is a legal arrangement where one person (the "grantor") gives control of his property to a trust, which is administered by a "trustee" for the "beneficiary's" benefit. The grantor, trustee and beneficiary may be the same person. The grantor names a successor trustee in the event of incapacitation or death, as well as successor beneficiaries.

A trust can be a useful and practical tool. But for others, it can be a waste of money and time. What is a living trust, anyway, and how does it differ from a will? Who should you trust when it comes to estate planning? And how can you tell which tools and strategies will work best for your particular circumstances?

A living trust, created while you're alive, lets you control the distribution of your estate. You transfer ownership of your property and your assets into the trust. You can serve as the trustee or you can select a person or an institution to be the trustee. If you're the trustee, you will have to name a successor trustee to distribute the assets at your death. The advantage of a living trust? Properly drafted and executed, it can avoid probate because the trust owns the assets, not the deceased. Only property in the deceased's name must go through probate. The downside? Poorly drawn or unfunded trusts can cost you money and endanger your best intentions.

Irrevocable Trusts: There are a variety of Irrevocable Trusts that provide excellent Asset Protection. However, choosing the right type of Irrevocable Trust is important. Irrevocable Trusts can privide excelent protection, however, they are much more restrictive that other types of Asset Protection.

A Charitable Remainder Trust is an irrevocable trust. The purpose of a Charitable Remainder Trust is to allow you to make a donation to the charity of your choice while allowing you to retain control of the donation and keep any income derived from the assets during your lifetime. Upon your death or at the end of 20 years, the assets are given to the charity and the assets are not taxed as part of your estate.

Explore all your options with an experienced and licensed estate planning attorney or financial advisor. Generally, state law requires that an attorney draft the trust.

Avoid high-pressure sales tactics and high-speed sales pitches by anyone who is selling estate planning tools or arrangements. Avoid salespeople who give the impression that AARP is selling or endorsing their products. AARP does not endorse any living trust product.

Do your homework. Get information about your local probate laws from the Clerk (or Register) of Wills. If you opt for a living trust, make sure it's properly funded, that is, that the property has been transferred from your name to the trust. If the transfers aren't done properly, the trust will be invalid and the state will determine who inherits your property and serves as guardian for your minor children.

If someone tries to sell you a living trust, ask if the seller is an attorney. Some states limit the sale of living trust services to attorneys. Remember the Cooling Off Rule. If you buy a living trust in your home or somewhere other than the seller's permanent place of business (say, at a hotel seminar), the seller must give you a written statement of your right to cancel the deal within three business days.

The Cooling Off Rule provides that during the sales transaction, the salesperson must give you two copies of a cancellation form (one for you to keep and one to return to the company) and a copy of your contract or receipt. The contract or receipt must be dated, show the name and address of the seller, and explain your right to cancel. You can write a letter and exercise your right to cancel within three days, even if you don't receive a cancellation form. You do not have to give a reason for canceling. Stopping payment on your check if you do cancel in these circumstances is a good idea. If you pay by credit card and the seller does not credit your account after you cancel, you can dispute the charge with the credit card issuer.

Check out the organization with the Better Business Bureau in your state or the state where the organization is located before you send any money for any product or service. Although this is prudent, it is not foolproof: there may be no record of complaints if an organization is too new or has changed its name.

The Cooling Off Rule provides that during the sales transaction, the salesperson must give you two copies of a cancellation form (one for you to keep and one to return to the company) and a copy of your contract or receipt. The contract or receipt must be dated, show the name and address of the seller, and explain your right to cancel. You can write a letter and exercise your right to cancel within three days, even if you don't receive a cancellation form. You do not have to give a reason for canceling. Stopping payment on your check if you do cancel in these circumstances is a good idea. If you pay by credit card and the seller does not credit your account after you cancel, you can dispute the charge with the credit card issuer. Check out the organization with the Better Business Bureau in your state or the state where the organization is located before you send any money for any product or service. Although this is prudent, it is not foolproof: there may be no record of complaints if an organization is too new or has changed its name.

Helpful Resources

Where to Complain: The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or to get free information on consumer issues, visit www.ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

The National Academy of Elder Law Attorneys, Inc., 1604 North Country Club Rd., Tucson, AZ 85716; 520-881-4005.

The National Consumer Law Center, Inc., 18 Tremont St., Ste. 400, Boston, MA 02108-2336; 617-523-8010.

The American Bar Association, Service Center, 541 N. Fairbanks Ct., Chicago, IL. 60611; 312-988-5522.

The Federal Trade Commission works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them.

United States real estate investment information for the global real estate investor is provided by Bruce Woodworth.