TRUSTS

One reason trusts are such a popular addition to an estate plan is that they are very flexible, meaning a trust can be tailored to help achieve a wide range of estate planning objectives, including: Probate avoidance Pet planning Medicaid planning Asset protection Incapacity planning Special needs planning Protecting the inheritance of a minor child Charitable gifting

One of the most common mistakes Settlors make when creating a trust is appointing someone close to them as the Trustee of their trust without taking the time to consider that person’s qualifications. Your Trusteewill greatly influence the success, or failure, of your trust. Someone with a legal and/or financial background is preferable when considering who to appoint as your Trustee which is why a professional Trustee is often the best choice. It also greatly reduces the likelihood of a conflict of interest arising during the administration of your trust.

Overall, the Trustee is responsible for protecting and managing the trust assets and administering the terms of the trust. Some of the duties of a Trustee include: Understanding and following the trust terms Communicating with beneficiaries Managing trust assets Investing trust assets using the “prudent investor standard” Keeping detailed records of trust business Distributing assets pursuant to the trust terms Preparing and filing trust taxes

Creating a trust doesn’t mean you no longer need a Will. Even if you use a trust to distribute your estate assets, you still need a Pour Over Will to ensure all your assets make it into the trust at the time of your death. Using a trust as your primary method of distributing your estate assets, however, can go a long way toward avoiding probate and ensuring that your beneficiaries receive their inheritance as soon as possible after your death.

Once upon a time, trusts were predominantly used by wealthy families to control the family fortune and to pass it down through the generations without incurring taxes. Those days are long gone. In fact, trusts are now found in the average estate plan given how user-friendly they are and how versatile they are. While high net worth individuals do still utilize trusts with great frequency, individual’s with a modest estate can also now benefit from incorporating a trust into their estate plan as well.

Only living trusts can be further divided into irrevocable and revocable living trusts.  A revocable living trust is one that can be modified, terminated or revoked at any time and for any reason by the Settlor. An irrevocable living trust, on the other hand, is one that cannot be modified, terminated, or revoked by the Settlor for any reason once it has been activated.  A testamentary trust is always revocable because it is activated by a provision in the Settlor’s Will and the Will can always be changed up to the point of the death of the Testator. An irrevocable trust [Read more…]

All trusts fall into one of two broad categories – testamentary and living trusts. A testamentary trust is one that does not take effect until the death of the Settlor and is usually triggered by a provision in the Settlor’s Last Will and Testament. A living trust, formally known as a “inter-vivos” trust, is a trust that takes effect during the lifetime of the Settlor.

A trust agreement can be extremely complex; however, all trusts require the same five basic elements for creation, including: Settlor– the person who creates the trust. A Settlor may also be referred to as the Grantor or Maker of the trust. Trustee– an individual or entity that administers the trust terms as well as manages and invests the trust assets. Most Settlors also appoint a successor Trustee in case the original Trustee cannot or will not serve. Beneficiary– a beneficiary is the person, entity, or even family pet that receives the benefit of the trust assets. A trust may have [Read more…]

Put simply, a trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor, also referred to as a Grantor or Maker, who transfers property to a Trustee. The Trustee holds that property for the beneficiaries designated by the Settlor in the trust agreement. You likely enter into trust agreements on a regular basis without realizing it. Imagine, for example, that you must move out of state on short notice and you ask your neighbor to hold onto a box of family heirlooms until your sister can come [Read more…]