A trust is a written document which creates an asset holding entity for the benefit of someone or something.
Trusts are generally created while the Grantor is alive, or by the means of the person’s estate plan.
Some trusts are effective while the Grantor is alive, and others take effect at the time of the death. The trust is governed by the terms under which it was created. The person or entity who holds legal title or interest, and who has the responsibility to manage the assets and distribute the income or assets, is called the Trustee.
All trusts revolve around three parties:
- the grantor (person creating the trust and providing the assets to fund it),
- the trustee or trustees (who manage the trust assets),
- and the beneficiary or beneficiaries (those named to benefit from or utilize trust assets).
In a trust, a designated trustee becomes responsible for managing the property and other assets owned by the trust.
There are numerous reasons to create a trust including:
- second marriages,
- the prevention of probate or ancillary probate,
- to prevent or minimize death taxes,
- to manage assets on behalf of children until they attain a certain stated age,
- to maintain and care for pets,
- and to allow a disabled person to maintain government benefits.
Different types of trusts include:
One of the most misunderstood estate planning documents is a Revocable Living Trust.
During the grantor’s life time, he or she creates a Trust and then must transfer ownership of their assets into the it. These assets are then managed by the named grantee, and upon the grantor’s death, pass according to the directions contained within the document. However, many people do not need or want this form of estate planning.
- What is a Trust? A trust is a written document that creates a relationship between persons. The grantor or settlor is the person who creates the trust. The terms of the trust are set forth in the document.
- Reasons to Create an Estate Plan Now vs. Later Have you ever said or overheard someone else say I do not need a Will, Power of Attorney or Advance Care Directive? By not engaging in estate planning you are allowing laws enacted by the legislature to make your decisions.
- What is a Revocable Living Trust? A Living Trust is one established while the grantor is still alive. A Revocable Trust means the grantor can amend the documents as long as they are mentally competent.
- Choosing a Beneficiary Planning for a future after you die is never fun, but it is one of the best ways we can protect and help the ones we love. Selecting the correct beneficiaries of your estate is a task nobody relishes, but it is nonetheless important.
- Special & Supplemental Needs Trusts and Government Benefits Understanding Supplemental and Special Needs Trusts is the first step to ensuring future financial stability for any loved ones receiving disability benefits from the government.
- Estate Planning Lessons From The Boss Estate and “death tax” planning must be undertaken in a way that also educates the client. In this way, the client understands the applicable laws, how those laws will impact their ultimate goals or how they may lower or increase the potential taxes occasioned at death.