Introduction to Trusts: Covering the Basics

A well-crafted estate plan is a great legacy to leave loved ones, and can help alleviate stress for your love ones. The estate planning process involves selecting your Personal Representative, your beneficiaries, appointing your trustee and successor trustees, for minor children, and selecting the way in which your assets will be distributed. Although do-it-yourself internet templates are tempting, those automated programs often fail to meet your individual needs which can cause issues for your loved ones. The assistance of an experienced estate planning attorney, on the other hand, can bring peace of mind and pay dividends in the long run.

A trust is an estate planning tool that helps the maker of the trust (known as the settlor or grantor) accomplish objectives like transferring assets without the need for Probate, providing for minor children or children with special needs, planning for incapacity, and avoiding costs from fees and estate taxes. Establishing a trust is the creation of a legal relationship where the you transfer property into a trust to be managed by a trustee. A trust can be an effective device for both small and large estates.

A trust created during the settlor’s life is known as a Revocable Living Trust. Conversely, a trust created in a will is known as a testamentary trust. While a trust usually involves more upfront costs than a simple will, it can often save your estate and your family assets upon death.

Trusts can be either revocable or irrevocable. In a revocable trust, the settlor retains control of the assets and can modify or terminate the trust at any time. In contrast, an irrevocable trust cannot be modified, and assets cannot be removed from the trust. Irrevocable trusts are helpful in avoiding estate taxes and Medicaid planning.

A Revocable Living Trust is a flexible legal document that allows the settlor wide latitude in making estate planning decisions and, perhaps most importantly, allows you to make alterations to your trust or even revoke the trust altogether. Trusts allow you to place restrictions on how property will be distributed upon death. Generally, you have much more control over how his or her assets will be distributed with a trust than a will.

One primary benefit of a trust is the ability to bypass the probate process. When you die with only a will, your estate passes through probate. As part of Probate, the will becomes part of the public record, creditors come forward to claim against your estate, and property is distributed in accordance with the terms of the will. When you fund a trust prior to your death, you have already accomplished many of the tasks of probate. Consequently, the winding up of your estate is usually much more efficient.

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