What is a Trust
Crafting a Comprehensive Estate Plan: Unveiling the Power of TrustsA trust is a powerful legal document that provides a structured way to manage and distribute assets according to your wishes. Unlike a will, which simply designates asset recipients, a trust allows for customized estate planning to suit your family's specific needs. Trusts can be either revocable or irrevocable, depending on your objectives.
Living TrustA living trust, also known as an inter vivos trust, is established during your lifetime. It can be either revocable or irrevocable and comes into existence before your passing. Assets can be placed into the trust during your lifetime or specified in your will to transfer into the trust upon your demise.
Reasons for creating a living trust during your lifetime include avoiding probate, ensuring a smooth asset transfer to heirs, and safeguarding investment properties from personal liability. On the other hand, some individuals create trusts without funding them until after their death to maintain flexibility, especially when uncertain about available estate assets. This approach can be valuable, especially for assets passing to minor children or for tax-efficient estate planning involving family trusts. Testamentary TrustA testamentary trust is one you establish within your will. It doesn't help you avoid probate or facilitate asset transfers before your death, but it can be instrumental in managing assets for your minor children upon their inheritance. Additionally, it allows you to exert control over how heirs manage or dispose of property.
While testamentary trusts technically become irrevocable after your will is probated, you retain the ability to change your will during your lifetime, offering a degree of flexibility. |
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Funding the Trust
One crucial yet often overlooked step is funding the trust after its creation. This process entails transferring assets into the trust, commonly known as funding. For real property, it involves signing a deed transferring ownership to the trust and recording it with the appropriate registry of deeds.
In the case of investment or bank accounts, you'll need to provide financial institutions with a copy of the trust and instructions to re-title accounts in its name. If necessary, you'll obtain a tax identification number for the trust, typically a straightforward online application process.
In the case of investment or bank accounts, you'll need to provide financial institutions with a copy of the trust and instructions to re-title accounts in its name. If necessary, you'll obtain a tax identification number for the trust, typically a straightforward online application process.
Naming a Trustee
Selecting the right trustee is vital since this individual must follow your documented instructions but often has discretion in managing the assets. You can initially serve as the trustee, with a successor trustee designated for situations like your death or disability.
Avoid naming a sole beneficiary as trustee, and consider naming a successor to the successor trustee for added security. This layered approach ensures that even if unforeseen circumstances arise, someone you've chosen will oversee asset management and distribution in line with your estate plan.
Avoid naming a sole beneficiary as trustee, and consider naming a successor to the successor trustee for added security. This layered approach ensures that even if unforeseen circumstances arise, someone you've chosen will oversee asset management and distribution in line with your estate plan.
How Our Estate Planning Lawyers Can Help
Our experienced team of estate planning attorneys can guide you through the complexities of trusts, ensuring your assets are safeguarded and your family's future is secure, tailored to your unique goals and preferences. You can use the button below to schedule a free information call, or simply give us a call at 781-784-2322.
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