Testamentary and Living Trusts

Planning for and preparing for the inevitable is not anyone’s cup of tea; however, it is better and less expensive to be prepared. Over the years an increasing amount of people have gained interest in developing trusts as a means to avoid probate, as an efficient way to provide for their young children and/or special needs children in the event something would happen to them and for numerous other reasons. Creating a trust can be very specific to your particular situation and needs; therefore we have assembled a brief Q&A regarding the essentials related to the planning and preparation of Trusts.

»What is a Trust?
»What can a Trust do?
»What are the Duties of a Trustee?
»What property can be transferred to a Trust?
»Are there different types of Trusts?
»When should a Lawyer’s services be utilized?

What is a Trust?

A trust is a legal person that comes into existence when an individual signs a legal document which contains certain provisions. A grantor/trustor is the creator of the trust and the one who transfers property to the trust. A trustee is the person who has a fiduciary duty to protect the assets of the trust, whose powers are spelled out in the trust, and who must make sure that the purposes of the trust are carried out. A beneficiary is one who benefits from the trust. There can be two types of beneficiaries in a trust document, an income beneficiary and a principal beneficiary. An income beneficiary receives only income from the trust (i.e.; savings account bond, dividends from stock, rental income from Real Estate, etc) A principal beneficiary receives the actual trust assets (i.e., monies in a savings account, bond, stock or rental Real Estate, etc)

There are two basic types of trusts, an intervivos trust, and a testamentary trust. An intervivos trust is created during one’s life, and can be either revocable or irrevocable. Whereas, a testamentary trust is created under the terms of an individual’s will and does not become effective until an individual’s death.

A trust is a complex and expensive estate planning tool compared to a Will, and does not eliminate the need for a Will, as there may be some assets that do not get transferred to the trust, leaving the need for a Will.

Trusts are most popular with individuals who own large estates, and may not be necessary for many estates. Therefore, it is important to consult an experienced Estate Planning Attorney before taking the planning plunge on your own.

What can a Trust do?

Basically, a trust collects all of your assets in one place, which simplifies management and investment of your assets making it easier to keep track of everything. Trusts enable a grantor to determine who receives their assets, when and under what conditions. A trust clearly and specifically identifies trustees, beneficiaries, and trust assets.

A trust is an efficient and effective method to avoid probate because it allows assets to pass quickly to beneficiaries.

What are the Duties of a Trustee?

As indicated above, a trustee has a fiduciary duty to protect the assets of the trust, and to make sure that the purposes of the trust are carried out. Accordingly, by having possession and control of the trust assets the trustee must preserve the trust assets; control the investment of the trust assets; keep an accounting of the trust assets; keep the assets separate; make accurate distributions and keep beneficiaries fully informed.

The powers of a Trustee vary by State and are clearly spelled out in a Trust Document.

What property can be transferred to a Trust?

Several types of property may be transferred to a Trust, and we can assist you through this process as a different method may be required for each type of property. The following types of property can be effectively transferred to a Trust:

• Personal property
• Automobiles
• Real Estate
• Bank Accounts
• Registered Stocks & Bonds
• Life Insurance
• Retirement Plans

Are there many different types of Trusts?

Yes, there are several different types of trusts available to meet the needs of every individual. Some of the different types of trusts include:

• Testamentary Trusts
• Living Trusts
• Life Insurance Trusts
• Special Needs Trusts
• Charitable Remainder Trusts
• Qualified Domestic Trusts
• Personal Residence Trusts
• Dynasty Trusts

If you would like more information on a specific type of trust, please contact our office for more information.

When should a Lawyer’s services be utilized?

There are many self-help kits on the internet that allow individuals to prepare and plan their own trusts; however, as the creation of a trust is complex and expensive in nature, we recommend that you obtain the expertise of a licensed professional who has experience in the estate planning process. It is always better to have the assistance of an experienced attorney to guide you through the challenging process.

Our helpful and capable staff invites you to contact us today to schedule an informative, 30 minute FREE, initial consultation with an estate planning attorney.

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