Trusts are legal arrangements that provide for the transfer of assets from their owner, called the grantor or trustor, to a trustee. They set the terms for the trustee’s management of the assets, for distributions to one or more designated beneficiaries, and for the ultimate disposition of the assets. The trustee is a fiduciary obligated to handle the trust assets in accordance with the terms of the trust document and solely in the best interests of the beneficiaries.
Unlike wills which take effect upon death, trusts become effective upon the transfer of assets to them. A “living trust” can be created during a grantor’s lifetime.
A trust agreement creates 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 maker or grantor or trustor), who transfers property to a trustee. The trustee holds that property for the trust’s beneficiaries. All trusts are first divided into one of two categories – testamentary or inter vivos – the latter of which is more commonly referred to as a living trust. A testamentary trust is a trust that arises upon the death of the settlor and which is typically activated by a provision in the settlor’s will.
There are two primary types of trusts — living trusts and testamentary trusts.
What size is your estate?
Estate planning often begins with a will. But you can also include a trust or multiple trusts in your planning. A trust is a fund that spells out exactly how and when your assets will be distributed after your death. It can also minimize gift and estate taxes. And like a will, a trust can specify who will care for your minor children after your death. A trust can be used instead of a will or in combination with a will. Many people assume that trusts are only for wealthy people with sizeable estates. Not so. The flexibility of trusts allows people with varying income levels to use trusts to suit their particular needs.
Select the product that's right for you and create an account. How long does the process take? it takes most people about 20 minutes to complete their trust-based estate plan and 15 minutes to complete their will-based estate plan. The length of time it takes to complete probate varies greatly depending on the state in which you reside and the size of your estate. Rest assured that our probate experts will help you move through the process as quickly as possible. Is this legal? all of our estate plans are built by attorneys and customized by you. Every plan is legally-valid, state specific, and created to meet your specific needs.
There are a variety of costs associated with setting up and administering a trust. Some of these costs include: setup fees – this includes attorney fees for drafting the required documents such as a will and any durable powers of attorney. The cost of these fees will depend on the complexity of the trust and size of the assets. Maintenance fee – if you are appointing a bank or a trust company as the trustee (a “corporate trustee”), they will charge an annual administrative maintenance fee. This fee will depend on the value of the trust and the effort involved in maintaining the assets in the trust.
Do you want to place assets in a trust?
You might choose to place all of your assets in a trust or just some of them. Assets that you might transfer to a trust include real estate, bank accounts, investment accounts, individual stocks and bonds, artwork, antiques, and other assets of value. Intellectual property, such as copyrights, may also be transferred to a trust. Assets that you would generally not place in a trust include ones that already have a named beneficiary. That means things like a 401(k) plan, individual retirement accounts (iras), or health savings accounts (hsas). Whether you can remove assets from a trust after the transfer of ownership depends on the type of trust you've created.
Many people are under the misconception that estate planning is only for the wealthy. Not true. Regardless of your age or your wealth, it’s a particularly good idea to plan in advance on how to distribute your assets if you become incapacitated or after your death. Basic estate planning involves drafting a will which can include your assets and property as well as important decisions such as who will care for your minor children if something happens to you and your spouse. So, why consider a living trust as part of your estate plan? first of all, you should familiarize yourself with basics about living trusts.
A trust is an entity or an agreement that allows you, as the grantor or donor, to transfer property to someone known as the trustee for the benefit of a third party, called the beneficiary. Trusts are often used in estate planning to take advantage of favorable tax treatment, to place conditions on the use or distribution of assets, or to allow the heirs to take possession of assets without a probate proceeding. The trustee holds the assets in a fiduciary capacity. They have a high responsibility to see that the assets are preserved for the beneficiaries. A living trust is created during your lifetime and provides a way for you to preserve and retain control over your assets even if you should become incapacitated.
A living trust is a trust made while the person establishing the trust is still alive. In this case, a parent could establish a trust for a child during his or her lifetime, designating himself or herself as trustee and the child as beneficiary. As the beneficiary, the child does not own the property, but instead receives income derived from it. Living trusts can be revocable or irrevocable. The most popular type of trust is the revocable living trust, which allows the settlor to make changes to the trust during his or her lifetime. A revocable trust usually directs the trustee to pay all income to the settlor for life and to pay the trust assets to named persons after the settlor’s death.