The "Trust" is a fundamental and common tool used by many people for estate planning and administration purposes. A trust is a legal entity created by an individual either while alive or at the point of death. A trust holds, acquires, sells, invests, pays out income, and distributes property to others.
Living Revocable Trust
The most common trust created and used by most people is the living revocable trust. This is a trust created now while the person is living that may be changed or revoked by the person at any time. Generally speaking the fundamentals are; 1. A person creates the trust, 2. The person transfers all, or selected assets to the trust, 3) The person creating the trust is both the trustee and the beneficiary of the trust while living, 4) At death the assets of the trust are either immediately distributed to the living beneficiaries of the trust or they are held by the trust and income is distributed, or a combination of the two. One of the main advantages of this is that while living the person does not experience any real change in how he manages and uses the assets and at death probate is avoided.
Irrevocable Trust
This is a trust that is created and the beneficiaries become fixed. It is not revocable. The assets conveyed to the trust are held by the trust and managed by the trust and paid out according to the terms of the trust. This trust also avoids probate at death because the person dying no longer owned the assets but rather they had already been conveyed to the trust.
Some Trust Considerations
Trusts may be created and become effective right now while a person is living or they may be created in such a manner as to become in effect at the point of death. The objectives of the individual dictate which should be used.
Trusts are a mechanism by which a person can have a large measure of control over what happens with his or her property after he or she dies. A trust can be structured in a number of different ways to do such things as; Hold, manage and invest property to then be distributed in amounts to pay for educational or medical expenses of a person; Hold, manage and invest property to be distributed in certain amounts upon the fulfillment of certain conditions by the beneficiary; Hold, manage and invest property to create an income stream for the beneficiary; and many more uses.
Trusts avoid the expenses associated with probate. Property held by the trust is distributed by the trust instead of having to be distributed by the Courts in a Probate Proceeding.
Trusts are a vehicle to minimize costs and tax consequences of estates and are quite effective for that purpose.
There are many, many different forms of trusts and each can be tailored to accomplish the objectives of the individuals involved. If you believe a trust is something to investigate you should contact an attorney to visit and devise a trust that suits your objectives and your family's needs.
